Thursday , 19 September 2019
Breaking News

Goan developers view dual GST rates positively

With two GST rates on incomplete housing projects its looks like builders now have no grounds for complains, finds out Shoma Patnaik

To the slew of fiscal changes coming in the way of the real estate industry post-GST, the announcement of dual tax rates on ongoing housing projects is the latest. It has left builders with very little ground for complain and deferred possible increase in housing rates.

Builders were previously grumbling over the loss of input tax credit and threatening to raise housing rates as compensate. They now have the choice of accepting input credit with higher tax or vice versa. All in all the incentive is expected to keep home prices steady and boost buying sentiments in the residential segment.

Meanwhile in Goa, realty developers view the dual tax rates on their sector positively. According to property developer, Nilesh Salkar, the two GST rates are a “bridge arrangement in the transition period” for the industry to get used to the loss of input tax credit from April 1 2019.

“All this time we were claiming input credit. But now we will have to stop. It means lot of exercise and paperwork or even the possibility of paying back money to the government,” said Salkar.

He explained that, whether local builders chose between GST rate of 12 per cent or 5 per cent would depend on case to case. “Each builder will have to work out his financials independently and take a call. It depends on when the project is started, the stage of construction how much sale is made and number of factors,” he said

Salkar feels that, the government decision to allow dual GST rates for ongoing projects is on the whole good and brings clarity on input credit to the industry.

Roosevelt Valadris, proprietor, R&A Builders, says that, he prefers the GST of five per cent. “It is best to give a one-time tax to the government and forget about paying any more taxes,” he says.

“It is a good move as builders can forget about the hassle of claiming input credit,” says Valadris. According to him, buyers are not bothered about input tax and happier with lower GST. “The customer will be confused with multiple rates,” he says.

Under dual tax rates announced by the GST Council on March 19, builders have the option of choosing a tax rate of 12 per cent with input tax credit facility or five per cent without it for incomplete projects as on March 31 2019. Along with dual rates, the tax on affordable housing projects is lowered from eight per cent with tax rebates to one per cent without it.

Vasco based developer, Cedric Dias, Prime Builders, points out that, most builders are likely to go for the five per cent GST slab as it will encourage customers to come forward and buy. He says that, it would be good if the industry was eligible for input tax credit in future too. “Most builders are trying their best to keep costs under control and keep construction expenses under check,” said Dias.

Previously the GST Council on February 24 2019, had lowered the tax rate for under-construction residential properties from 12 per cent (with input tax credit benefit) to five per cent (without benefit). Further on under-construction affordable houses the tax rate was lowered from eight per cent with tax rebates to one per cent without it.

However with builders worried over the accumulated input stock and unhappy over the loss of tax credit, the Council changed the tax structure and imposed through dual rates. From April 1, the GST on the real estate industry is at flat rate of five per cent (without input tax) and one per cent on affordable housing.

For builders to avail the new rates they have to procure 80 per cent of their raw material from registered dealers. Any shortfall in the procurement according to the norms will result in builders levied with GST of 18 per cent.

Check Also

DNA Networks invests Rs 4 crore in startup B: Live

B: Live, India’s first EV tourism start-up, received Rs four crore funding from DNA Entertainment …