The Goods and Services Tax (GST) augurs well for Goa’s real estate sector which is going through a severe crisis due to the slump in the market.
Realtors are very optimistic that it will moderate tax structure and replace multiple taxes. But they said that the impact depends on the final GST rate. Local builders said that the uniform tax is on the whole good news for the sector as it will improve transparency. The president of CREDAI, Desh Prabhudessai said that GST indicates change for the sector which at present is suffering from an economic slowdown.
“Home buyer in general could benefit from the introduction of GST if the rates are moderate. The real estate industry is considered a growth engine of the economy. It is one of the fastest growing sectors of the economy and plays a vital role in the overall growth and development,” said Prabhudessai.
While builder, Nilesh Salkar, pointed out that GST could bring about greater transparency and possibly improve compliance. “Construction companies currently pay many taxes that it borders on double taxation,” said Salkar.
“Completed homes will not be impacted by GST but price of homes under construction is expected to increase since the builder will have to absorb the GST paid on the material during construction,” he added.
“There are two other categories- one is selling an under construction apartment and another of renting properties—both of which are likely to come under the ambit of this tax,” said Salkar.
He said that since GST will be applicable on the materials used for construction it would certainly impact costing of projects but for that one needs to see what the final rate of the tax would be.
“GST rate of 22-25 per cent will certainly be a dampener, increasing the cost of buying an under construction for a home buyer with an additional burden of paying stamp duty to register the property,” said Salkar.
On the other hand, realtor, Chacko Varghese, CV Construction, Miramar said that he is frantic as he was unable to sell a single flat. “As of now the market is down and the number of customers has drastically reduced. Only if the market goes up then can it benefit the real estate sector,” said Verghese.
“Overall the business is down internationally too. It is not very clear as to what the government has to offer to construction companies through GST. If they reduce the cost then we will also reduce and pass it on to the customer,” he said.
“I have my fingers crossed. Here’s to hoping GST has a significant positive impact on the Indian real estate sector as far as transparency in business is concerned, but it could drive up the price of the finished product,” said Salkar.