GST brought down sale by 50% in Vijayawada
The real estate sector in Vijayawada and its issues with the goods and services tax (GST) is adding to the problems of homebuyers.This follows the real estate industry’s refusal to follow the Real Estate Regulatory Act (Rera), which is said to be an empowering tool for homebuyers. Now, realtors say business has come down by almost 50% after the roll-out of GST.
Sources said homebuyers have to bear the brunt as prices have shot up by 12%, and at the same time, builders are in a fix over the demand for houses coming down drastically.
Homebuyers are opting to buy flats with occupancy certificate, putting developers in a fix. While 12% GST is imposed on new flats, which were purchased before issuance of occupancy certificates, complete exemption is being given to the houses with occupancy certificate.The GST regime, which intended to end double taxation, has given a provision to give input tax credit to the builders, which they must transfer to the buyers.
The developers, who pay GST on purchase of raw material such as iron and cement, should claim the tax credit and transfer it to consumers as it will reduce the overall tax they pay on the purchase.
Though buyers may get back some of the tax paid, they are still hesitant to invest in the ongoing projects because of increased taxes. YV Ramana Rao, president of Credai’s Vijayawada chapter, said the sale of new houses (under construction) has come down by nearly 50% after the roll out of GST.