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New GST Rates may Raise Property Costs, say Real Estate Developers

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Real Estate Sector: New GST Rates may Raise Property Costs

If the real estate sector comes under the expected 18% tax slab and stamp duty is not subsumed under GST, property prices may rise, worry developers

Mumbai: Real estate developers are concerned that the implementation of the goods and services tax (GST) may raise the overall cost of properties if the sector comes under the expected 18% tax slab and stamp duty is not subsumed in the new tax structure.

The GST Bill was cleared in Parliament’s budget session, paving the way for the roll-out of the indirect tax regime on 1 July. According to the legislation, land leasing, renting of commercial properties and purchase of under-construction housing projects will attract GST.

The GST Council on 31 March approved nine sets of rules for the implementation of the tax. It will hold its next meeting on 18-19 May to discuss the rates on individual items. Under the new indirect tax regime, there will be four tax slabs—5%, 12%, 18% and 28%.

It is speculated that for the real estate sector, the GST rate may be fixed at 18%. While VAT (value-added tax) and service tax that customers pay at the time of buying a property has been subsumed, stamp duty has been kept out of its purview—a move that most developers are worried may end up being a burden to the sector, which is already under pressure after three years of slow sales.

“As an industry norm, all taxes are subsumed under GST, but in the case of real estate, what they (government) are saying is stamp duty and other local body taxes will continue as it is. Taxation is going to be beyond reasonable,” said Niranjan Hiranandani, co-founder and managing director of Mumbai-based Hiranandani Group, who is also the president of real estate lobby group National Real Estate Development Council (Naredco).

Both Naredco and Confederation of Real Estate Developers’ Associations of India (Credai), another builders’ group, have recommended to the finance minister that the GST rate should not be kept higher than 12% for the real estate sector.

“The GST rate on the consideration excluding the value of land should not be more than 12% covering both CGST (central GST) and SGST (state GST) after providing credit for all the inputs… Anything above this rate would only result in a continued deceleration of this industry and also compromise GDP (gross domestic product) growth,” Credai said in a presentation to the government in February.

Prakash Challa, chairman (finance and taxation committee), Credai, said the group had sought an appointment with the finance minister to discuss the GST rate. According to him, the current net tax should be retained after the introduction of GST as well.

“There is a thought process right from the beginning that stamp duty should be subsumed along with GST and we have one common rate. End consumer is paying stamp duty, which is a state subject. So we are governed under the central tax and also under the state tax,” said Challa, who is also the managing director of Chennai-based real estate and infrastructure developer SSPDL Group.

Home buyers now pay a cumulative tax of around 11-12% including both service tax and VAT, depending on the rules in each state. Irfan Razack, chairman and managing director of Bengaluru-based Prestige Group, said that the stamp duty, which differs from state to state, should either be subsumed under GST or should be rationalized to about 2% from its current average rate of around 8%. He added that the new tax regime will benefit the sector in the long run and developers may be able to save as there will be no excise duty on various raw materials.

“If rate remains at 18%, it is high for an industry where the government is keen that investment should come in. I think it should be 12%, otherwise, it will not bring down the prices, it may only go up,” said Nihal Kothari, executive director at law firm Khaitan and Co.

Source: Livemint

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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