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GST cut on housing sales 'revolutionary step', to boost sentiments: Experts

Press Trust of India  |  New Delhi 

Property developers and consultants Sunday hailed the GST reduction on housing sales and termed the move as a "revolutionary step", saying it will boost sentiments and help the cash-starved sector in clearing around 6 lakh unsold homes

The Sunday decided to cut GST rate on affordable homes to 1 per cent without input (ITC) from earlier 8 per cent with ITC. The GST on under-construction flats, which are not under the affordable housing segment, has been reduced to 5 per cent without ITC from 12 per cent earlier with ITC.

Sales of under-construction houses were severely affected as there was no GST on completed homes. Developers had been demanding cut in GST rates as people were not buying under-construction units.

While most players welcomed the decision, some developers, however, said that housing prices may increase as there will be no input available to realty firms.

"The reduction of GST on affordable housing to 1 per cent is a revolutionary step for Indian This move is a significant triumph for and will play a huge hand in boosting their sentiments," said.

The industry is now set to leap forward with the revised GST rate and the enhanced ease of doing business, he added.

said the industry lauds the GST rate cut on real estate as a welcomed and positive move which brings a big relief to the and help to narrow down the demand mismatch gap.

This announcement gives an impetus to the affordable housing and enthuse homebuyers to close the sale deals, he added.

"The slash in GST rates gives the beleaguered realty sector the much-needed breathing room and will certainly help it maintain some forward momentum in 2019. Another booster shot given by the is changing the very definition of the budget-range of affordable housing," said.

Anshuman Magazine, & CEO, India, South East Asia, & Africa, CBRE, said: "This is a huge relief for and the developers alike. The reduction in GST on under construction residential projects will further give much-needed boost to the industry."

The reduction GST on under construction property will provide a significant boost in fuelling residential sales, JLL said.

CMD Shishir Baijal termed the step the most decisive move by the with a clear focus on demand stimulation.

"This move will give the necessary fillip to the demand in under-construction segment, which has been suffering from low sales levels for last many quarters," he added.

Hiranandani, however, rued that GST on was not reduced from 28 per cent. He said developers will have a challenging time with no input credit available now.

Supertech R K Arora said this rate cut will provide a much needed impetus to the that is facing severe liquidity crisis.

said, "It is a great relief for both the and the There is no incentive to postpone the home buying decision anymore."

PD Sundar, Business Head, Quikr Realty, said: "This is a win-win development for both builders and home buyers given that the has gone through a relatively tough period over the last couple of years."

Gaurs group said the decision will boost housing demand as it lowers tax burden on home buyers.

Chairman said: Today's recommendations from the is a major step towards housing for all.

MD said: "Applicable GST at 1 per cent for all properties up to 45 lakh and carpet of 90 sq mtr will cover majority of existing inventory and fresh launches".

said: We can expect demand going up soon for under construction projects."

Mahagun said sales of flats up to Rs 45 lakh will increase.

said: "This is a very good for home buyers, not only it reduces taxation for them but also makes it simpler. Now buyers need not worry about input and anti profiteering authority.

However, he said developers will require recalculation of pricing if they had assumed certain input tax credit while setting prices post GST era.

Sushma group too felt that prices may rise in absence of ITC.

Amit Modi, ABA corp, said the construction cost may go up in absence of ITC and demanded reduction in GST on raw materials like

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, February 24 2019. 20:35 IST