Revealed: Even after GST Council meet, here is why real estate developers are unhappy

GST Council's decision for real estate sector: The Indian real estate developers have shown their displeasure over the GST Council's decision to keep the GST rates applicable to the real estate unchanged. They were of the view that reduction in GST rates would have helped to lower of prices, some sigh of relief to the developers having a huge number of unsold inventories into the residential realty segment helping the sluggish realty market to see some sign of revival in near future.

It bears remembering that the modest growth numbers we witnessed last year were significantly led by sales of ready-to-move properties – not only because they are exempt from GST, but because incessant project delays have taught buyers to be wary of under-construction projects.

Showing displeasure over the GST Council's decision Anuj Puri, Chairman – ANAROCK Property Consultants told in a written statement, "After much anticipation, the GST Council has failed to deliver a final verdict on GST applicable on real estate — but how much would it really have mattered?"

He said that GST on under-construction properties was a severe hurdle in 2018, and the possibility of a possible GST rate cut in late December literally froze property buying decisions for many.

Regardless of how much or how little such a rate cut will actually do to revive the market, all stakeholders – from industry players to buyers – hoped for it with bated breath.

"The biggest paradox in Indian real estate is that numbers suggest a massive burden of unsold housing stock in the midst of a chronic shortage of housing. As long as prices don’t reduce significantly, the housing shortage will only widen regardless of tax sops," Puri of ANROCK added.

Standing in sync with Anuj Puri of ANROCK; Rakesh Yadav, CMD at Antriksh India told Zee Business online, "While the major focus of anticipation for a GST rate change was on the residential sector, commercial real estate cannot be ignored. As of now, GST on commercial real estate continues to be levied at 18 percent on the overall rental value without the builder getting any input credit benefits," adding, "In 2018, there was a perceptible increase in site visits and buyers actively scouting for options at the best deal.

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Negotiations were getting increasingly interesting and meticulous as the parties debated out the costs and discounts to arrive at mutually acceptable figures. A final decision on the GST rate and clarity or the abolition of the ITC could have triggered demand, but would it really have helped close transactions?

Thus, we may need to look beyond minimal tax sops and consider whether they actually make homes affordable and catalyse sales. Perhaps, instead of constantly looking for tax sops, we need to question the very fundamentals of pricing in real estate."