GST rate pushes up realty prices, worsens slowdown in Mumbai
In addition to the 12% GST rate, the stamp duty of 6% has added to homebuyers’ burden.mumbai Updated: Aug 13, 2017 00:51 IST
The Goods and Services Tax (GST) has adversely affected the already sluggish realty sector owing to the 12% tax rate, experts have said.
Earlier, the value-added tax was levied at 4.5% and the service tax at 1%. In addition to the GST rate, the stamp duty of 6% has added to the burden, taking the total tax liability to 18%.
This means that for a Rs1- crore apartment, the buyer has to shell out Rs18 lakh in taxes.
According to Rajesh Vardhan, managing director, Vardhman Group, there had been a fall in sales since the GST came into effect. “Sales have reduced owing to the GST. Consumers are feeling the burden and many have postponed their decision to buy homes,” said Vardhan.
Although builders may get some rebate in the form of input tax credit while paying raw material suppliers, buyers are doubtful whether they would pass on the benefit.
The scepticism has dealt another blow to the real estate sector.
Prakash Rohera, chairman of K Karma Realtors, blamed the lack of clarity for predicament. “Builders and homebuyers are in dark about how much rebate they will get, which has caused the confusion,” said Rohera. He said the demand for ready flats had increased as there was no GST for them. “People are shying away from buying flats which are under construction,” he added.
Homebuyers rued that regulations and taxes had only made things difficult for them.
“The real estate prices are already high and the GST has only increase the rates further,” said Mitesh Gala, a teacher who is working in a leading school in Mumbai.
The real estate sector in the last few years has been going through slowdown owing to the unaffordable rates, a slew of regulations and high interest rates on home loans.