DNA EXCLUSIVE: Revised GST rates, clarity in rules to boost property sales, say realty players

Realty players hope that property sales will pick up in Mumbai and other cities following the implementation of revised GST rates May 10 onwards. They also expect clarity in regulations after the completion of general elections to help the situation. However, a section of the builders and developers noted that the revised GST rates may impact property prices.

Knight Frank India CMD Shishir Baijal said buyer sentiments have remained muted throughout this period. They had adopted a wait and watch policy despite the consecutive reduction in repo rates by the Reserve Bank of India. ''Hopefully, sales velocity will pick up after the general elections as we expect some clarity on regulations and authorities by then coupled with revised GST rates that will be adopted by the sector May 10 onward. We hope that the graph takes an upward curve by the second half of the year,'' he added.

Baijal hoped that the reduction in repo rate is also transmitted to the customers in terms of reduced leading rates which would hopefully assist in stimulating sales.

Nahar Group vice chairperson Manju Yagnik admitted that the realty sector is still adjusting to the new rates. She said the GST on affordable housing being levied at 1 per cent and GST on non-affordable housing being levied at 5 per cent is undoubtedly a progressive move for the sector at large.

''The new laws have proven to increase sales as affordable housing is the key aspect within the regulatory framework to achieve the 'housing for all' mission. It has also helped in clearing flats that once remained unoccupied because of high rates on real estate but are now made affordable as per the new GST rates,'' Yagnik said.

Poddar Housing and Development MD Rohit Poddar said that the revised GST rates were a subject of dilemma for buyers and developers as well; although the option to go with older rates was a level-headed move by the GST Council. ''The new rates seemed lucrative for buyers, but developers were anticipating a cascading effect on property prices since the input tax credit was not available with the new rates." he said.

However, Builders Association of India spokesman Anand Gupta informed that earlier the 12 per cent GST on sale of property was with input tax credit (ITC). ''Unless the revised GST of 5 per cent on sale of flat is attached with the ITC, the realty sector will not get any relief and without that it is very difficult to boost the industry,'' he said.

National Real Estate Development Council (Maharashtra) vice president Ashok Mohanani argued that the GST processes that are done online make them transparent and accountable. ''The declared cut off of Rs 45 lakh and area 60 square metre for affordable projects has set a benchmark, giving developers an easy way to keep up with the demand and supply to continue witnessing an upswing,'' he said.

Property Sector Speculations

• Builders hope sales to take upward curve by 2nd half of the year 
• Nahar Group VC said realty sector is still adjusting to new rates
• She said the GST on affordable housing being levied at 1%, GST on non-affordable housing being levied at 5% is undoubtedly a progressive move