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'GST relief mainly for housing projects executed post July'17'

Press Trust of India  |  Mumbai 

Benefits of the goods and services (GST) for home buyers would majorly be seen in projects executed post implementation of the unified regime in July last year but may be below the government's anticipation, says a report.

As per the report by JLL and released here, while GST has simplified the treatment for the realty sector and has resolved some of the long-standing issues like valuation, the significant benefit appears to be only with regard to increased input credit on the procurement of materials.

"The benefit to end consumer (in residential market) would be seen primarily in projects executed post implementation of GST, but the benefit may not be as significant as the government's expectation," India (real estate) told reporters here.

The report explained that increased input credit should ideally reduce construction cost but in an apartment, in addition to construction cost, the land cost also plays a significant role. As a result the maximum benefit under GST would be available to projects that are executed post the new tax regime, while may not be significant for residential projects that neared completion close to implementation of the unified tax regime.

"In any case, for most projects, the estimated benefit (from GST) may not exceed 3 per cent of the overall construction cost and may not translate into a significant reduction in prices for consumers," it said.

It also noted that while savings is estimated to be in the range of 3-4 per cent for customers, the cost of land involved in the project would "significantly impact the ultimate savings the end customer may derive under GST".

said that while government has issued certain clarification with regard to implementation of GST in the real estate sector, "the need of the hour is to set up discussion forums across locations and engage the tax authorities and developers at different levels".

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

First Published: Tue, April 17 2018. 17:15 IST