In a latest update, the central government is proposing to simplify the country’s GST system by keeping items under only two slabs 5 percent and 18 percent.
How Does It Affects The Homebuyers?
This simplicity in the tax structure will reduce the cost of developers and benefit homebuyers according to the real estate experts.
The proposed move aims to simplify the rules and developers will get the benefit of lower taxes as per the Market observers opinion.
This would also affect the home purchase costs as after this implementation homebuyers will be able to get homes at cheaper rates.
The construction industry has been asking for quite some time that the GST rates are very high and if it can be simplified and reduced to some extent, it will definitely have a positive impact, especially from inputs like cement as chief component, said Anshuman Magazine, chairperson & CEO (India, SE Asia, and Middle East & Africa), CBRE.
Further adding, “For the commercial property segment, a GST rate cut could act as a much-needed respite at a time when looming tariffs in the range of 25–50 percent on Indian exports are already making investors cautious about putting fresh capital into warehousing and factory projects.”
Uncertainty Around Global Trade Policies Affecting Decision Making
Moving ahead, the Magazine said that the uncertainty around global trade policies has slowed down decision-making, with many manufacturers and investors deferring large commitments until there is greater clarity.
Adding, “In such a scenario, lowering the tax burden on construction inputs can provide a significant boost and a cushion for developers and investors against volatility and help in sustaining momentum in the sector.”
If we consider the present system, different GST rates are applicable on construction materials in the real estate sector.
For instance, it is 28 percent on cement, 18 percent on steel, 28 percent on paint, and 18 percent on tiles and sanitary ware.
It appears that this his cost directly affects the total cost of the project and the housing price.
In this regards, the Prime Minister Narendra Modi in his 79th Independence Day address on August 15 had said that the government would roll out next-generation reforms to the GST by Diwali, including a major reduction in tax rates.
