New Delhi: Property developers and consultants on Sunday hailed the GST reduction on housing sales and termed the move as a "revolutionary step", saying it will boost sentiments and help the cash-starved sector in clearing around 6 lakh unsold homes.
The GST Council on Sunday decided to cut GST rate on affordable homes to 1 per cent without input tax credit (ITC) from earlier 8 per cent with ITC. The GST on under-construction flats, which are not under the affordable housing segment, has been reduced to 5 per cent without ITC from 12 per cent earlier with ITC.
Sales of under-construction houses were severely affected as there was no GST on completed homes. Developers had been demanding cut in GST rates as people were not buying under-construction units.
"The reduction of GST on affordable housing to 1 per cent is a revolutionary step for Indian real estate. This move is a significant triumph for home buyers and will play a huge hand in boosting their sentiments," CREDAI President Jaxay Shah said.
The real estate industry is now set to leap forward with the revised GST rate and the enhanced ease of doing business, he added.
NAREDCO President Niranjan Hiranandani said the industry lauds the GST rate cut on real estate as a welcomed and positive move which brings a big relief to the home buyers and help to narrow down the demand mismatch gap.
This announcement gives an impetus to the affordable housing and enthuse homebuyers to close the sale deals, he added.
"The slash in GST rates gives the beleaguered realty sector the much-needed breathing room and will certainly help it maintain some forward momentum in 2019. Another booster shot given by the government is changing the very definition of the budget-range of affordable housing," ANAROCK Chairman Anuj Puri said.
Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said: "This is a huge relief for home buyers and the developers alike. The reduction in GST on under construction residential projects will further give much-needed boost to the industry."
The reduction GST on under construction property will provide a significant boost in fuelling residential sales, JLL India CEO and Country Head Ramesh Nair said.
Knight Frank India CMD Shishir Baijal termed the step the most decisive move by the GST council with a clear focus on demand stimulation.
"This move will give the necessary fillip to the demand in under-construction segment, which has been suffering from low sales levels for last many quarters," he added.
Hiranandani however rued that GST on cement was not reduced from 28 per cent. He said developers will have a challenging time with no input credit available now.
Supertech Chairman R K Arora said this rate cut will provide a much needed impetus to the real estate market that is facing severe liquidity crisis.