RK Arora, Chairman, Supertech Ltd regarding today’s decision of the GST council.

As one of the largest real estate companies in the country, we welcome the reduction in the GST rates applicable on under-construction properties to 5 percent, from 12 percent earlier, by the Goods and Services Tax Council. Further, the fact that now, affordable housing projects will attract 1 percent tax. This will provide a much needed impetus to the real estate market that is facing severe liquidity shortages. No new home buyers can go ahead with their plans much more easily. However, it is disappointing that the council has chosen to not allow developers to claim input tax credit. The real estate sector is currently in a very poor shape and needs significant help from the government to finish current projects and grow at the rate that is needed for the economy as a whole.

The Indian real estate sector is one of the most important for the economy and GDP. The move of the GST council to reduce the GST to 5% for under construction houses and houses yet to get completion certificates would have significantly helped the sector prospects in the coming year. The sector is slowly coming back to normal growth rates after taking massive hits with demonetisation over the last two years. GST was introduced to replace the cascading and multi-layered taxation system with a unified tax which was expected to not just simplify the systems in place but also improve adherence. Implementation of GST marginally brought down construction costs but affected luxury residential and commercial real estate significantly. However, taxes like stamp duty, property tax were not subsumed under GST causing home buyers to pay higher amounts for the same homes. It is imperative that the government remove the stamp duty and reduce the GST rate applicable, especially keeping in mind the housing for all target of 2022.