GST can reduce cost burden on home buyers

Q: GST bill, if cleared by the Parliament, can stabilize or even reduce cost burden on home buyers.

Govinda,

21st December 2015

Property Tax in Mumbai

service tax

vat

gst

gst bill

service tax on flat purchasing

vat on flat purchased

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Replies (3)

It will be a great move if such happens. Also stamp duty is not proposed to be incorporated under GST and will thus continue to remain as it is at present. So, decreased cost of construction will take place once a lower bracket of GST is applied as the developers will be liable to pay much less than today, thus allowing cost of units to fall which will directly benefit the end users.

Hritwik, Noida

21st December 2015

Comment

Hi folks,
Real estate sector has been stumbling under slow sales, increased prices and high interest rates for couple of years now. These factors have led to intense cash shortage among developers, leading to project delays.

Ankita, Ghaziabad

21st December 2015

Comment

Right Ankita,
Even banks and other financial institutions have also been unwilling to lend to the real estate sector considering the risky nature of business and over borrowed capital balance sheets of companies. Not only this, delay in approvals is also one of the major factor for the increase in project cost and delays.

Hritwik, Noida

21st December 2015

If GST Bills cleared in the parliament, would help the sector in terms of comfort of doing business. One point tax collection is something the sector was looking forward to and the dream is not far from realization. If we include stamp duties, toll, sales tax, services and a few others, we currently face a 30% project-wise burden.

Ankita, Ghaziabad

21st December 2015

Correct Ankita,
a single GST structure is the need of the hour as the situation may get further complex with states having power to notify differential SGST rate. In such cases, local developers will have a tough time in the middle and segregation is bound to happen for states selecting higher tax bracket.

Rakshit, Mumbai

21st December 2015

Hi Govinda,
Home buyers at present are under the burden of service tax and VAT on the purchase of residential units when booked prior to its completion. There are other components of non-creditable tax costs such as central sales tax, entry tax, customs duty, excise duty, etc., that is duly paid by the developer on its procurement side, which are basically part for the cost pricing of the units.

Guruprasad, Chennai

21st December 2015

Comment

You are right.....
At the same time it will reduce home prices and will give boost to the slow sales. In UP buyers have been spending approximately 30-40% in taxes to the government. With the introduction of GST, this should come down to somewhere around 15-18%, which would take the burden off the industry players and will eventually help the end users in obtaining property at lower rates.

Hritwik, Noida

21st December 2015