GST Council Applicable Status on Real-Estate by Hardik Agarwal

GST Council Applicable Status on Real-Estate by Hardik Agarwal, CEO, Radha Madhav

2017 saw the Goods and Services Tax (GST) subsume 17 central and state taxes and 26 cesses in one big sweep. GST, a single tax slab, was to relieve the taxpayer from the stress of keeping tabs on a multitude of taxes. The stakeholders of the real estate sector were expecting GST to simplify taxes to a great extent. Industry experts touted that GST would free the real estate sector from hidden taxes, black money, complex audits, and tax processes, and make way for a transparent and systematic administration. However, once rolled out, GST instead became a major deterrent for property buyers. As a result, the Finance Ministry waived off GST on properties for which Completion Certificate (CC) had been acquired.

GST Council Applicable Status on Real-Estate by Hardik Agarwal
Hardik Agarwal, CEO, Radha Madhav

Currently, buyers have to pay GST on payments made for properties that are under construction or are ready for occupation but haven’t been issued completion certificate at the time of sale. The rate stands at 12% for premium housing and a concessional rate of 8% on affordable housing. The real estate sector has been hoping for a reduction in the GST rates for under construction houses, but the last two council meetings held in December 2018 and January 2019 have had no consequences to this effect. While there have been several speculations over the last year about a possible cutback in GST, the council has maintained the status quo during the last couple of sittings. The 32nd GST Council meeting held on January 10, 2019, at New Delhi, witnessed differences of opinion on whether or not GST should be levied on real estate. Consequently, the committee decided to have a seven-member group of ministers to further discuss and debate the exclusion.

In December 2018, the real estate market experienced a slouch amidst all the speculation of a possible reduction in GST. Even the little growth that market witnessed in 2018 can be attributed to the sale of ready-to-move properties that were exempt from GST. Besides, delays in completion of under-construction projects are all too common. While it wouldn’t be wrong to say that GST on under-construction properties slowed down the market considerably, a cutback on GST alone cannot breathe life into the real estate market.  The ratio of unsold inventory and aspiring buyers has always been skewed, even before the introduction of GST. While the reduction of GST can convert fence-sitters into home buyers, making housing affordable still needs a solution that is independent of GST.

For more updates on the architecture and interiors industry visit: www.fortunestreets.com

 

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