Property developers and consultants Sunday hailed the GST reduction on housing sales and termed the move as a "revolutionary step", saying it will boost sentiments and help the cash-starved sector in clearing around 6 lakh unsold homes.
The GST Council Sunday decided to cut GST rate on affordable homes to 1 per cent without input tax credit (ITC) from earlier 8 per cent with ITC. The GST on under-construction flats, which are not under the affordable housing segment, has been reduced to 5 per cent without ITC from 12 per cent earlier with ITC.
Sales of under-construction houses were severely affected as there was no GST on completed homes. Developers had been demanding cut in GST rates as people were not buying under-construction units. While most players welcomed the decision, some real estate developers, however, said that housing prices may increase as there will be no input tax credit available to realty firms.
"The reduction of GST on affordable housing to 1 per cent is a revolutionary step for Indian real estate. This move is a significant triumph for home buyers and will play a huge hand in boosting their sentiments," CREDAI President Jaxay Shah said. The real estate industry is now set to leap forward with the revised GST rate and the enhanced ease of doing business, he added.
NAREDCO President Niranjan Hiranandani said the industry lauds the GST rate cut on real estate as a welcomed and positive move which brings a big relief to the home buyers and help to narrow down the demand mismatch gap. This announcement gives an impetus to the affordable housing and enthuse homebuyers to close the sale deals, he added.
"The slash in GST rates gives the beleaguered realty sector the much-needed breathing room and will certainly help it maintain some forward momentum in 2019. Another booster shot given by the government is changing the very definition of the budget-range of affordable housing," ANAROCK Chairman Anuj Puri said.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said: "This is a huge relief for home buyers and the developers alike. The reduction in GST on under construction residential projects will further give much-needed boost to the industry." The reduction GST on under construction property will provide a significant boost in fuelling residential sales, JLL India CEO and Country Head Ramesh Nair said.
Knight Frank India CMD Shishir Baijal termed the step the most decisive move by the GST council with a clear focus on demand stimulation. "This move will give the necessary fillip to the demand in under-construction segment, which has been suffering from low sales levels for last many quarters," he added.
Hiranandani, however, rued that GST on cement was not reduced from 28 per cent. He said developers will have a challenging time with no input credit available now. Supertech Chairman R K Arora said this rate cut will provide a much needed impetus to the real estate market that is facing severe liquidity crisis.
CREDAI NCR President Pankaj Bajaj said, "It is a great relief for both the real estate industry and the home buyer. There is no incentive to postpone the home buying decision anymore." PD Sundar, Business Head, Quikr Realty, said: "This is a win-win development for both builders and home buyers given that the real estate sector has gone through a relatively tough period over the last couple of years."
Gaurs group MD Manoj Gaur said the decision will boost housing demand as it lowers tax burden on home buyers. Signature Global Chairman Pradeep Aggarwal said: ?Today's recommendations from the GST council is a major step towards housing for all.
"TDI Infracorp MD Kamal Taneja said: "Applicable GST at 1 per cent for all properties up to 45 lakh and carpet of 90 sq mtr will cover majority of existing inventory and fresh launches". Gulshan Homz Director Deepak Kapoor said: ?We can expect demand going up soon for under construction projects."
Mahagun Director Dhiraj Jain said sales of flats up to Rs 45 lakh will increase.
PropTiger Chief Investment Officer Ankur Dhawan said: "This is a very good news for home buyers, not only it reduces taxation for them but also makes it simpler. Now buyers need not worry about input tax credit and anti profiteering authority. However, he said developers will require recalculation of pricing if they had assumed certain input tax credit while setting prices post GST era.
Sushma group ED Prateek Mittal too felt that prices may rise in absence of ITC. Amit Modi, Director ABA corp, said the construction cost may go up in absence of ITC and demanded reduction in GST on raw materials like cement.