GST may not effect tax on properties:consulting firm

KOLKATA:Tax burden on homebuyers in under-construction projects is not expected to increase in Goods and Services Tax (GST) regime, an official from a property consulting firm said on Thursday.
The general perception was that with the 12 per cent GST rate, the tax would go up from 5.5 % service tax plus VAT.
Samantak Das Knight Frank India's Chief Economist and National Director said that "We expect there will not be any upward impact of tax burden on buyers for under-construction projects after the roll-out of GST. Apparently, with the 12 per cent GST, there is a difference of 6.5 per cent on tax rates as compared to the pre-GST rate of 5.5 per cent. But lot of efficiencies have been brought in through GST".
Developers are working onthe input tax credit in the new indirect tax regime would be passed on, he said.
He also said that developers know passing of the extra tax burden to buyers could result in a further drop in sales.
For new projects, it is expected that base prices would be revised so that post GST, price value of homes remains the same as in pre-GST era," Das said on the sidelines of the launch of new report "India Real Estate - Residential and Office.
New launches crashed by 41 per cent, lowest in seven years, in the first six months of the current calendar year in top eight cities of Mumbai, Pune, Hyderabad, Chennai, Bangalore, Kolkata, Ahmedabad and Delhi - National Capital Region (NCR),according to Knight Frank India.
The sales volume was also down by 11 per cent year-on-year in the first half of 2017,the reports said.
The residential market had barely come out of the demonetisation shock when the need for Real Estate Regulation and Development Act(RERA)compliance put breaks on a large section of new projects, he said.
The first half of 2017 witnessed the resurrection of affordable housing across India with 71 per cent of the launches under the Rs 50 lakh price segment, up from 52 per cent during the same period last year,Das said.