INDORE: Houses may get dearer as over 90 per cent realtors have opted for the lowered Goods and Services Tax (GST) slabs without Input Tax Credit (ITC) that is seen escalating the cost of construction for builders.
Confederation of Real Estate Developers of India (CREDAI) Indore chapter said that most of the builders had opted for the lower tax slab as customers were not ready to pay higher GST.
Realtors were given a one-time option to choose between 1 per cent or 5 per cent tax rate without ITC for affordable and non-affordable houses respectively applicable from the new financial year or continue with higher tax rate of 8 per cent and 12 per cent respectively with ITC.
CREDAI Indore Chapter president Naveen Mehta said, “Most of builders have gone for lower tax slabs because that was easy and in accordance with the market sentiment.”
Developers said that the cost of operations had escalated and margins were squeezed as the new tax rates do not allow the benefit of ITC.
CREDAI Indore chapter spokesman Atul Jhawar said, “The cost of construction will go up but the new lowered tax rate was the suitable option because customers were not ready to pay more taxes as per the old system. The new levies have hit the margin of builders but we are ready to take the pain during the transition phase.”
Realtors said that initially builders would try to absorb the price hike as the demand was not encouraging and customers might not accept the hike.
Jhawar said, “The cost will definitely go up but looking at the market scenario, the demand may take a hit if cost goes up.”
Builders said that the lowered tax slab mandated 80 per cent procurement of materials from registered dealers which tax experts saw difficult to follow while realtors said most of the supplies in organised sector came from registered dealers.
Source : https://timesofindia.indiatimes.com/city/indore/realtors-gst-choice-to-make-houses-dearer/articleshow/69489708.cms