In India How GST Rate Cut Will Boost The Demand For Real Estate

In India How GST Rate Cut Will Boost The Demand For Real Estate


The government of the country has managed to help its residents by cutting tax over buying homes. And this will, certainly, give a boost to the home sales. Of course, the developers will be more active in making residential and commercial complexes by sufficing the needs of their customers for sure. Still, the industry experts have come up with their view that such tax reductions would not be enough for financially troubled developers on a solid ground. In this regard, the GST council released a statement that tax on under-construction residential properties will reduce to 5 percent from 12 percent for sure. On the other hand, the properties falling under the category of affordable housing will have tax reduction to 1 percent from 8 percent.

This has been considered as one of the best steps taken by Narendra Modi of Bhartiya Janta Party in the wake of elections in May 2019. Definitely speaking, tax reduction on real estate properties is intended to enhance overall investment in the said aspect. Even, the finance minister named Arun Jaitley said that changes in the taxation of real estate will give a boost to the housing sector. But, the other side of the coin talks about industry executives being sceptical over the decision as this may improve their financial position or not. Speaking in this regard, Om Ahuja of K Raheja Corp said that GST cut would give a sigh of relief to the over real estate market. Definitely, it is one of the biggest steps by Narendra Modi, which has been intended to create better investment opportunities.

In fact, increasing amount of debts taken by developers and failures of real estate projects has made banks as well as other financial institutions cautious about lending money. This has led a slump in property market. Two of Modi’s decisions like demonitization and rolling out of GST has hit real estate market hard. Still, the affordable housing has managed to take a jump and people will go more for it. Developers having affordable housi ng units staggered before, will witness a betterment for sure. Apart from other developers, Anuj Puri of Anarock Property Consultants has managed tounderline the issues of real estate sector.

According to him, numerous amount of under-construction housing projects have been extensively delayed and basic costs of the homes are quite high for maximum amount of investors. Though, the cut in sales tax will give a boost to real estate industry; still, it may be hindered by government’s decision to end input tax credits. Such forms of credits will allow developers to decrease their tax burdens at the time of sale by appealing for tax benefits paid towards for buying construction materials.


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