New Delhi: In the shadow of GST, builders and brokers speculate the real estate sale to be generally slow, until the time the real estate developers do not arrive at the actual tax impact of the new one-time taxation system. The customers, builders, and brokers are confused about the actual tax effect and final costing of ready to move flats in Delhi NCR.
A big question is hanging in balance about what GST effect can cause cost difference in the resale of ready to move or under construction apartments. Every investor is concerned and hence the builders and brokers’ offices are getting many queries in this regard every day. The customers are not clear on one point whether reimbursements and future payment reimbursements are possible from developer’s input tax credit.
The experts believe that there will be some time before investors could analyze the tax impact and choose right path in future real-estate investments. The developers had hardly recovered from demonetization effect and now they would require more time to recover and assimilate GST impact. This wait-and-watch policy will hamper the real estate market’s performance.
There is a strong belief in developers and real estate people that homebuyers would prefer more ready- to move property segment, as this is out of GST ambit. However, these properties may cost more as there would not be any input tax credit benefits. The developers may get benefit when the project is in early days, not when the apartments are almost ready, some experts have this opinion.
In GST announcement, the government has notified 18% tax against 12% earlier announced. However, along with that they also announced land value deduction of 1/3rd of total amount charged by the developer. Therefore, in total effect this will come to 12% only. Experts believe that revised tax rate will be tax-neutral and GST payable will stand at the same for the property buyers.
Once GST is implemented fully, things would clear regarding land cost calculations and service taxes on under-construction apartments. Premium projects have higher land rate so they will benefit in rates reduction in comparison to the midrange 2 BHK and 3 BHK flats in Delhi NCR.