CHENNAI: Home buyers are likely to pay more for their properties once the Goods and Service Tax (GST) is implemented, according to real estate experts.
The Confederation of Real Estate Developers Association of India (CREDAI) has stated that the imposition of GST of 12 per cent of land value may result in increase in additional tax burden. “The GST rate fixed at 12 per cent is only a fraction of its tax burden. It does not eliminate multiple taxation for real estate sector."
The stamp duty levied by the states on all immovable property would continue to remain in force even after implementation of GST,” the CREDAI stated.
Currently, the state has also increased the registration charges to four per cent along with stamp duty of seven per cent.
The CREDAI stated that it will endeavour to avoid additional GST demand on consumers for projects nearing completion. It also said that input tax credit for ongoing projects may not be feasible to avail under GST, thus limiting the capacity of developers to absorb the additional burden or pass on the benefits to the consumers. High inventories of unsold real estate may further compound the problem of tax credits, the CREDAI said in its release.
Welcoming the implementation of GST, T Chitty Babu, chairman and CEO of Akshaya Pvt Limited, told Express that the GST effectively does not give much in terms of saving to realty sector. “It can result in slight increase in the product, but it has to be worked out,” he added.