Andhra Pradesh real estate grapples with poor demand
As India marks the second year of the introduction of the Goods & Services Tax (GST), also dubbed the “Good & Smart Tax” by government figures, real-estate developers in Andhra Pradesh are grappling with demand that is showing no signs of picking up owing to the new tax, industry sources said on Saturday.
“There has been no announcement of major new projects in the major cities in AP like Visakhapatnam, Vijayawada, Nellore or Tirupati, because of the GST. The GST rate is 12% on the cost of an apartment. Added to this is the 7% registration fee,” says Are Siva Reddy, president of the Andhra Pradesh wing of the Confederation of Real Estate Developers’ Association of India (Credai).
“A potential buyer has to pay up to 20% as tax on a new apartment. If the apartment costs Rs. 50 lakh, then the tax liability would be Rs. 10 lakh. The high tax rates has dampened the real-estate market,” Reddy, who owns Are Brothers, a real-estate development company in Vijayawada, said by telephone Saturday.
According to Reddy, the residential real-estate market in AP was bedeviled by three major events in the past 18 months. “The demonetization of high-value currency notes impacted sales. This was followed by the Real Estate Regulation Act of 2016 for which the AP government notified the rules in March 2017. GST came into force from 1 July 2017. Together these three initiatives impacted the real-estate market in AP from which the sector is yet to recover,” Reddy said.