HT Estates - - FRONT PAGE - Bidya Sa­pam

MUM­BAI: Goods and ser­vices tax (GST) was ex­pected to bring down hous­ing prices but hasn’t, a joint re­port by con­sul­tants JLL In­dia and PwC said.

The re­port ti­tled ‘Im­pact of GST on Res­i­den­tial Mar­ket’ re­leased on Tues­day said busi­nesses were ex­pected to pass on the ben­e­fit of lower taxes un­der GST. How­ever, price ben­e­fits out of GST-led cost sav­ings are likely only in the “dis­tant fu­ture”, it said. Though GST on prop­erty is 18%, the ef­fec­tive rate is 12%, thanks to abate­ment pro­vided on land value. Be­fore GST, the rate was10-15%. Given­the slow reach of GST aware­ness amongst con­trac­tors and low level of com­pli­ance in ini­tial stages, the ben­e­fits of re­duced cost, byvirtue of in­put credit be­ing passed on by such con­trac­tors, is yet to be re­alised by devel­op­ers, the re­port said.

“The tax re­form which is also re­ferred to as Good and Sim­ple Tax, is aimed at re­duc­ing the fi­nal prices for the con­sumer, but this will de­pen­don­mar­ket­forces and the ef­fec­tive­ness of the mea­sures that the gov­ern­ment takes from an anti-prof­i­teer­ing per­spec­tive,” the re­port said. from in­put tax cred­its which should bring down con­struc­tion costs, cost of land makes abig dif­fer­ence to prop­erty prices. “In projects where the land cost is low, the sav­ings can be sig­nif­i­cant and close to the es­ti­mated sav­ings. How­ever, where the land cost is high, the sav­ings on ac­count of GST may not be sig­nif­i­cant,” it said. Ac­cord­ing to Ramesh Nair, chief ex­ec­u­tive of­fi­cer (CEO) and man­ag­ing di­rec­tor, JLL In­dia, the specifics of im­ple­ment­ing GST must be ad­dressed swiftly. Buy­ers of af­ford­able homes are ex­pected to ben­e­fit most as com­pared to other seg­ments like lux­ury and ul­tra-lux­ury, the re­port said. It also pointed to con­sid­er­able lack of clar­ity and aware­ness not just among devel­op­ers, tax pay­ers and buy­ers, but also among tax of­fi­cials.

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