Future projects and affordable housing sector to gain the most from GST: JLL India
The benefits of the Goods and Services Tax to the end customer would be seen primarily in the future projects and the projects executed post implementation of GST, says a report by JLL and PwC. The report ‘Impact of GST on Residential markets’ covers the overall impact of GST on homebuyers, project completion, land value and different categories of housing. The report states that currently there is lack of clarity among developers on the exact implications of GST. Further, with regard to raw material inputs — the challenge lies in estimating the cost of these commodities over the entire life cycle of the project. Since the purchase of these supplies is linked to construction progress it is difficult for developers to estimate upfront the costs and input tax credit received for the same, it says. The report says that the actual implications of the GST can be understood through various aspects such as status of project completion, land value, location of the project and the category of the housing project. Ramesh Nair, CEO and Country Head, JLL India said, “Goods and Services Tax (GST) has been a matter of discussion for both the demand and supply side of the real estate community. The government has issued certain circulars to set clarity in this sector, however, the need of the hour is to set up discussion forums across locations and engage with tax authorities and developers at different levels. This alone can address the concerns of this sector which plays a significant role in impacting the overall sentiment of the economy.” The report further states that there is the complexity of being on the right side of the NAA (National Anti-profiteering Authority) by passing on the benefit of input tax credit to the customer, despite an increase in any other costs. There is no specific mechanism provided for offsetting any other increase in costs against the benefits of input tax credit. Kunal Wadhwa, Partner -Indirect Tax, PwC India said, “The impact on real estate sector has always been part of the limelight for any major reform. While the change brings in more transparency and maturity to the sector, the requirements under the anti-profiteering law has been a contentious issue for this sector”. Talking to Realty Plus, Wadhwa raised certain issues prevailing in the sector. “The stamp duty is still levied due to which the prices have still not gone down. There is need to club the stamp duties within the ambit of GST,” he said. Highlighting the gains form GST, Ashutosh Limaye, Head Research & REIS, JLL India said, “The affordable housing segment will gain the most from GST regime as the tax have been reduced to 8 per cent. The projects to be constructed in future and the projects executed post implementation of GST will benefit. The projects in off-prime locations and in small cities will also benefit.” The report summarises that the end consumers may be technically entitled to some amount of relief though not significant, whereas the builders would be better off explaining the rationale of passing on or not passing on this benefit depending on their fact pattern.
Tags : Latest News Real Estate JLL Affordable Housing GST PwC