Home buyers denied full input tax credit by some developers: CBRE
Some developers are not passing on the full benefit of input tax credit under the GST to home buyers who have booked flats in under-construction projects, property consultant CBRE said on completion of one year of the new indirect tax regime.
New Delhi: Some developers are not passing on the full benefit of input tax credit under the GST to home buyers who have booked flats in under-construction projects, property consultant CBRE said on completion of one year of the new indirect tax regime.
The Goods and Services Tax (GST) came into effect from July 1 last year in the country. The demand for ready-to-move-in flats has gone up as completed projects do not attract the GST, prompting developers especially in South India to launch flats after execution of projects, it said in a report 'One year of the Landmark GST - Impact on the RE (Real Estate) Market'.
"GST has had a varying impact on the residential sector as the taxation is different for completed and under-construction properties. As completed projects do not attract GST, there is now a greater appetite amongst home buyers for ready-to-move-in residential units," CBRE said.
The under-construction flats attract 12 per cent GST but the rate is 8 per cent for affordable housing. Under the GST regime, the completed projects mean not only ready-to-move-in projects but also those that have been granted completion certificates.
For under construction projects, CBRE said developers are factoring in the full ITC (input tax credit) that they will receive on construction/development cost to arrive at the right selling price. "But, not all developers are passing on the full benefit of the ITC to the consumers, resulting in a dampening of home buyer sentiment," CBRE said.
To boost sales, the consultant said that such developers have been devising innovative payment schemes to attract customers such as subvention schemes that provide consumers an EMI holiday until grant of possession.