“Industry lauds the GST rate cut on real estate to 5%on Non-affordable and 1% on affordable housing without Input tax credit 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.

The GST rate on cement has not been reduced as was expected, at 28 per cent it remains among the highest taxed inputs for construction – and there will be no input tax credit, so developers will face a challenging time.  Also, if the announcement was ‘with immediate effect’, we would have seen sales of residential real estate units in the current financial year; the w.e.f. 01 April aspect means we will see rise in sales figures only in the next financial year.”

Dr Niranjan Hiranandani National President, National Real Estate Development Council (NAREDCO)

“Real estate sector needed rate reductions to prop up sales and the reductions announced today, for normal housing, and specially for affordable housing could lead to an uptick in demand “

“With these reductions, the GST rate on normal under construction apartments would be a little lower than that prior to introduction of GST and that affordable housing would be significantly lower than before “

“The combination of the increase in the threshold in order to be termed as affordable housing together with the lower rate of 1% could lead to significant upswing in demand “

“The lower rates would lead to a revival of the demand for under construction apartments, which had tapered down as buyers were preferring ready apartments which did not attract any GST ” having certain categories which are not eligible for input tax credits is an aberration of the basic principles of a good GST, in addition to leading to issues of traceability of transactions and making the transactions opaque “

“The transition provisions affecting under construction apartments where some payments have already been made, need to be seen to ensure that the benefits are passed on to buyers who have already booked apartments “

“Today’s GST council meeting was keenly awaited to give a step up to the real estate industry. The real estate sector has been witness to a severe downturn and a Group of Ministers had been set up to evaluate GST taxation of under construction properties as a measure towards  rejuvenating this sector.  Towards reviving the sector, today’s GST council meeting has announced  benefits to consumers by reducing GST rates on under construction properties.  For affordable housing the GST rate has been reduced to 1% from 8%  and for others from 12% to 5% without input tax credit.

We can expect that lower GST rates could boost demand of under construction properties as presently buyers prefer ready to move-in property because the property is available immediately as well as no GST is applicable. However, restricting input tax credit to property developers would break the credit chain and defeat the principle of seamless flow of credit, especially when cement has been placed in a higher tax bracket of 28% which means that there could be a build up of input tax costs.”

M.S Mani, Partner, Deloitte India

The 33rd GST council meeting was positive for homebuyers and in turn for developers. The issues regarding transaction costs and affordability which have plagued the sector over the last 18 months or so has been addressed. With the reduction in the rates of under construction buildings to 5% from 12% the developer fraternity will be relieved as this could potentially be the catalyst to boost demand for under construction homes.

Further, the reduction in rates from 8% to 1% for the affordable housing sector will help the sector grow and go a long way in achieving the honorary prime minister’s vision of housing for all by 2022. Also, doing away the ITC (Input Tax Credit) will make GST compliance for easier and more cost-effective for developers. That said, without ITC developers will now have to deal with increased cost of 18% (which is the GST rate for most construction-related items) and account for the same when planning cash flows and project costs.”

Mr. Farshid Cooper; Managing Director at Spenta Corporation

“This is a win-win development for both builders and home buyers given that the real estate sector has gone through a relatively tough period over the last couple of years. This move will give a major boost to affordable housing and also make it attractive for investors to once again consider under construction properties. End users will also be free to choose between ready to move in and under construction projects basis their exact needs without worrying about the GST component to a large extent. Consequently, builders should be able to move their unsold inventory and also launch new projects.

PD Sundar, Business Head, QuikrRealty

“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. Having a standard tax will surely help the developers to save cost and  achieve economies of scale at various levels and help them to pass benefit to the consumers.”

Mr. Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa

“For the GST Council to meet on a non-working day is something unprecedented, and goes on to show the extent of seriousness among policymakers to ensure speedy implementation of reforms. Today’s decision to reduce GST rates from  12% to 5% for under-construction properties and from 8% to 1% for affordable housing will directly benefit home buyers, and is likely to reinvigorate demand. It also removes the uncertainty around input tax credit (ITC) as buyers would now get the direct benefit of lower taxes instead of being depended on builders to pass on the ITC benefits to them. As housing sales pick up, builders with large inventory build-up will also get some respite. I congratulate the finance minister and the Group of Ministers (GoM) under the GST Council for their measured approach to removing the bottlenecks for achieving the target of ‘Housing for All’ by 2022.”

Mr. Ravinder Sudhalkar, ED & CEO of Reliance Home Finance and Co-Chairman of ASSOCHAM National Council of Affordable Housing on GST Council Meeting.