To ensure that manufacturers, developers and service providers pass on the benefit to the final customer, the Government has included an anti-profiteering clause in the GST bill under section 171.
The benefits of investing in under-construction properties will outweigh the benefits of investing in ready-to-move-in homes under the new Goods and services tax (gst) regime. Landlords will not be burdened under GST as those who have given their property on rent for residential use will not be charged any GST.
"GST is supposed to be a tax-neutral proposition, with input tax credit benefits to be passed on to homebuyers. However, lack of clarity on the amount and timelines of passing on this benefit have led to a predictable phenomenon-the quest for ways and means to avoid GST," said Anuj Puri, Chairman of Anarock Property Consultants.
With the introduction of the Goods and Services Tax (GST), the total incidence of tax will increase from 5.5 per cent to 12 per cent. However, developers will be able to avail of input credit, on all the goods and services purchased and spent in the construction of the property. Shrikant Paranjape,
Builders must pass on the GST benefit to homebuyers: Experts – GST Station Any reduction on this basic input cost could certainly boost the prospects for under-construction properties which are currently in low in demand – provided builders pass the benefit on to their consumers.
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Hyderabad. On February 24, as the gst council slashed tax rates for houses in both affordable and non-affordable segments, property developers and associations said that the reduction will boost the real estate sector in the city and state, and the benefit will be passed on to about 15,000 homes every year.
The cost they bear for these come to 20 to 25 per cent of the cost of materials they are buying. So, with the GST rate, between 12 and 18 per cent, it will reduce the cost of production for developers. This will be good for buyers, as developers will be able to pass a part of the benefit to them," Dhawan adds.
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