A sigh of relief to homebuyers in city of Indore as agents have chosen for lowered Goods & Services Tax (GST) slabs without Input tax credit (ITC) that intensifies the cost of construction for builders.
Homebuyers were facing financial burden as they required to pay such huge amount of GST. Hence Confederation of Real Estate Developers of India (CREDAI) Indore Chapter said that most of developers have chosen for Lower Tax slab.
An opportunity was given to select between 1 per cent or 5 per cent tax rate without ITC for affordable and non-affordable houses respectively which will be applicable from new financial year or to continue with higher tax rate of 8 per cent & 12 per cent with ITC respectively for the same.
CREDAI Indore Chapter president Naveen Mehta stated, “Many builders have selected lower tax slab due to customer’s preference and also in accordance with investor’s prevailing attitude.”
According to developers the cost of operations has escalated and margins were reduced as new tax rates do not prefer benefits of ITC.
Atul Jhawar, one of spokesman of CREDAI Indore chapter told that, “ due to this new lowered tax rate, the cost of construction will increase, but it was accepted as homebuyers were not in mood to pay more tax than that as per old system. The new levies have resulted to hit margin of builders but they are ready to face the chaos of transition phase.”
Realtors are of the view that it will be difficult for buyers to digest the price hike as it will result in loss of customers because they will not readily accept the hike.
Jhanwar also added, “The cost will rise but cooking at market scenario, the demand may take a hit if cost rises.”
Developers stated that, the selected lowered tax slab made compulsory 80% procurement of materials from registered dealers which tax experts found difficult to follow which agents said most of the suppliers in organized sector which came from regarded dealers.
Courtesy/By: Renu Kathale
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27 May 2019
