GST caused property prices to drop? What this expert said
In a report released on Tuesday, most developers claim that there has been a minor reduction in the prices on offer post the implementation of the Goods and Services Tax (GST).
In a report released on Tuesday, most developers claim that there has been a minor reduction in the prices on offer post the implementation of the Goods and Services Tax (GST). The report by JLL and PwC, Impact of GST on residential markets, focused on two major aspects. Developers are in the process of evaluating the per unit benefit arising on account of GST implementation and most developers say there was a minor reduction in prices on offer passing on the cost savings. Developers claim that it will have a positive impact on the real estate market in the future.
“GST has simplified tax treatment for the realty sector and has resolved some of the long-standing issues like valuation and tax type. It is seen as an additional benefit to consumers in the long-term. However, the significant benefit primarily would be around increased input credit on the procurement of materials, as per a report.
According to the report, currently, there is a lack of clarity among developers on the exact implications of GST. Developers believe that the exact impact will be understood only after a thorough analysis of the implications on each input cost (in the form of labour and raw material).
Abhishek Goenka, Partner and Tax Leader - Real Estate, PwC India said, “The benefit to the end customer would be seen primarily in projects executed post implementation of GST but the benefit may not be as significant as the government’s expectation. The government should engage with stakeholders to address their concerns. This would help the market gain the needed momentum as anything related to the sector significantly impacts the sentiments of the economy.”
The report summarises that the end consumers may be technically entitled to some amount of relief though not significant, whereas the builders would be better off explaining the rationale of passing on or not passing on this benefit depending on their fact pattern.
Source: DNA India