GST launch: Housing prices to come down, says Venkaiah Naidu

GST rollout: “As a urban development and housing minister, I am the happiest man that with the GST, prices of houses will definitely come down. If anybody is opposing the GST, it is habitual tax evaders. Larger builders community is happy, except fly-by-night operators", Venkaiah Naidu said.

By: ENS Economic Bureau | New Delhi | Updated: July 1, 2017 9:26 am
GST rollout, GST, venkaiah naidu, GST effects, housing, Real estate, GST rollout: The RERA regulations, which came into force from May this year, are such that there is no way to escape, Venkaiah Naidu said. (File Photo)

A day before the roll-out of the goods and services tax (GST), Union minister M Venkaiah Naidu on Friday expressed confidence that the indirect tax reform coupled with the property law will bring down the housing prices providing big relief to home buyers.

Naidu, the minister for housing and urban poverty alleviation, said only fly-by-night operators and habitual tax evaders are opposing the GST. “GST plus the Real Estate (Regulation & Development) Act will definitely bring big relief to house owners. There is no scope for evading anything in the GST. Input credit will also be transferred,” he was quoted by PTI as saying at the Aaj Tak-GST conclave.

The RERA regulations, which came into force from May this year, are such that there is no way to escape, he added.

“As a urban development and housing minister, I am the happiest man that with the GST, prices of houses will definitely come down,” Naidu said. “If anybody is opposing the GST, it is habitual tax evaders. Larger builders community is happy, except fly-by-night operators.”

Naidu emphasised that the Centre and states need to implement the new real estate law in an effective manner.

“Land and housing are state subjects. States are implementing agency,” he said, adding that he was not shying away from his responsibilities.

The minister was responding to a query about significant delays in housing projects in the National Capital Region, causing distress to home buyers and investors.

Naidu said he would discuss the issue with the Uttar Pradesh government. On Thursday, the government increased the GST rate for the construction sector to 18 per cent from 12 per cent but removed land value from computation of tax liability.

While notifying the tax rates for Central GST, IGST and Union Territory GST, the Central Board of Excise and Customs (CBEC) tweaked the tax rate and the mode of calculation. Construction of complex, building, civil structure, including a complex or building intended for sale to a buyer, wholly or partly, will attract a GST rate of 18 per cent.

GST, however, will not be imposed on fully constructed properties, where completion certificate has been issued by competent authority.

Earlier, the GST Council had in May decided to levy 12 per cent GST on construction of a complex, building, civil structure or intended for sale to a buyer, wholly or partly. The value of land was to be included in the amount on which tax was to be calculated. The Council, sources said, is likely to give a post-facto approval to changes in the GST rate schedule for the construction sector.

Last week, Naidu had asked the Chief Ministers (CMs) of all states to ensure that builders do not charge higher tax from homebuyers on instalments to be paid after GST comes into effect from July 1.

In a letter to the CMs, Naidu had said there had been complaints that the buyers who had booked flats and had made part payments, were being asked to make entire payment before July 1 to avoid higher tax. “…these activities are against the GST law. The Department of Revenue has clarified that construction of flats, complexes, buildings, etc. will have comparatively a lower incidence of GST if we compare it to a plethora of central and state indirect taxes under the existing tax regime,” the minister said.

Naidu said it is expected that the builders would pass on the benefits of lower tax burden after the GST implementation to the buyers in the form of reduced prices/instalments. “I would like to request your state government as well as the builders’ associations to ensure that no builder/ construction company should ask customers to pay higher tax rate on instalments to be received after imposition of the GST,” he wrote.

(With PTI inputs)

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