Artificial Intelligence makes way into our homes
With the government reconsidering the implementation of the current rate of GST and bringing it down for under-construction and finished houses to 5 per cent, the real estate experts postulate 2019 to be a game changer year for the industry.
Around 57% home buyers voted that they do not want to pay the Goods and Services Act (GST) at all for under construction properties. Despite paying registration and stamp duty charges to the government paying GST appears to be an additional burden for home buyers. The home buyers see GST as just one more in a plethora of taxations being levied in process of home purchase. Obviously, Indian real estate aims at having a tax subsumed into a single GST instead of all levies, cess and taxes. At present, if GST levels can be substantially lowered or totally done away with in the under construction stage, home buyers will see the silver lining and there is hope that there would be an upward movement in the sales.
According to experts, the proposal to slash GST for cement and bring it under the 18 per cent slab would give a boost to housing and construction and impact employment generation positively. Basically, any reduction on the basic input cost could help boost prospects for under-construction properties that are already low in demand, providing builders to pass on the benefits to consumers.
The GST council is likely to reduce the GST rate imposed on under-construction properties to 5% from the current 12% in its January 2019 meeting. Ready-to-move-in properties are exempted from GST which is why many buyers continue to prefer completed projects.
According to sources, the fitment committee of the Council had zeroed in on two proposals. The first one was to maintain a fixed 12 per cent GST rate, including a full input tax credit to builders, which would eventually make the effective GST rate 8 per cent once the input cost of land was accounted for and reduced. The other proposal stipulates a flat 5 per cent GST to be applicable to under-construction properties without including the input tax credit benefit, provided the builder purchases at least 80 per cent of the raw material from GST-registered suppliers.
This, according to experts, would reduce the adverse impact on the land abatement rate of 33 per cent being offered under the present system. The composite rate of 5 per cent would not only address the imbalance under the present GST regime, which subjects to under-construction projects but leaves completed units out of its scope and frees the industry from the requirement of monthly returns for availing input tax credit.
According to sources, a cut on GST in real estate would be announced in the next GST Council meeting to be held on January 10.