Happy with the interim budget announced on February 1, the industry is now pinning its hopes on finance minister Piyush Goyal and the GST Council to rationalize GST on under construction property, one of the key demands of the industry.
While he welcome most of the move, he added that now eyes will be on the next GST Council meet where a Group of Ministers examining GST on real estate would finally spell out their verdict on GST on under construction property.
“Now, it is to be seen what the GoM has decided. A positive outcome will have a positive impact on many under construction properties,” Hiranandani added.
In the last GST council meeting, finance minister Arun Jaitley had told reporters that a seven-member GOM has been constituted to find convergence on real estate issues. “The recommendations of the seven-member Group of Ministers on real estate will be considered in the next GST Council meeting,” Jaitley had said after the council’s meeting.
Currently, 12 per cent GST is levied only on under construction real estate projects. Projects with an occupancy certificate are not subjected to GST, however developers claim it had tilted the market in favor of complete projects and buyers avoid under-construction projects now since they have to pay up an additional 12 per cent tax.
To ease some pressure on developers, the government’s interim budget has proposed extending the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years. This will be applicable from the end of the year in which the project is completed and positively impacts creation of fresh stock.
The interim budget of last week has proposed extending the period of exemption from levy of tax on notional rent, on unsold inventories, from one year to two years. This will be applicable from the end of the year in which the project is completed and will ensure that the slow-down in creation of fresh stock as a result of the previous situation — where the exemption was only for one year — will be positvely impacted.