A year later, uncertainties on GST implementation mar realty sector

CHENNAI: At the time of Good and Services Tax (GST) implementation last year,  the provision of input tax credit and transparency in the sector due to GST was expected to bring down home prices.

However, rising land prices, confusion ranging from filing of returns up to the recent requirement of e-way bills and lack of clarity on abatement available for land costs, create difficulties for home buyers and builders alike.

“High land prices still remain a major obstacle in making real estate an affordable commodity in the true sense,” said Surendra Hiranandani, CMD, House of Hiranandani.

Another major reason for GST benefits being unclear is the uncertainty surrounding levy of taxes. “A recent notification on the realty sector indicates (though not directly) that transfer of development rights may be subject to GST. Being in the nature of an immovable property, such transfers should ideally be outside the purview of GST,” said Harsh Shah, partner, Economic Laws
Practice.

“However, uncertainty around the same has resulted in tremendous reduction in transactions in the nature of joint developments, re-developments, which is typically the modus operandi of this sector in key cities,” he added.