GST cut will boost realty sector in Hyderabad
On Sunday, as the GST Council slashed tax rates for houses in both affordable and non-affordable segments, property developers and associations said that the reduction will boost the real estate sector in the city and state, and the benefit will be passed on to about 15,000 homes every year. The revised rates will come into effect from April 1, 2019.
The GST council reduced GST rate for affordable homes to 1% without input tax credit (ITC) from the earlier 8% with ITC in metro cities, including Hyderabad and Bengaluru. “This would mean that all flats below Rs 45 lakh and 60 sqm area will get this benefit,” said Gummi Ram Reddy, the Telangana chapter president of Confederation of Real Estate Developers’ Associations of India.
For under-construction properties in normal category, the GST rate has been reduced to 5% from the earlier 12%. “Many flats in the city come under this category. So, reduction in both categories in metro cities will make difference for customers, as every year 20,000 units are ready in Telangana and about 16,000 units come under this category,” Reddy said. Most are in Hyderabad. These decisions will make a difference to flat buyers. For example, a person wanting to buy a flat costing Rs 45 lakh will now get a reduction of up to Rs 2.5 lakh.
However, builders expressed concern over the removal of input credit for them. They say this will impact the rates in apartments that are below 4,000 sft. “Earlier, with whatever input credit we used to claim, we used to buy steel, cement etc. Now, we must pass on that burden to customers. However, we have to see the complete details of the GST council’s decision,” said Ravindar Rao, president of Telangana Real Estate Developers Association.