Real Estate Sector in Dire Need of GST Framework Overhaul
CREDAI-MCHI urges government to review GST framework to ease burden on real estate sector, citing concerns over redevelopment, affordable housing, and rehabilitation projects.
Gst FrameworkReal Estate SectorRedevelopmentAffordable HousingRehabilitation ProjectsReal EstateSep 12, 2024
Mumbai, with over 14,000 dilapidated buildings and 70 lakh residents living in slums, faces significant housing challenges. Redevelopment is crucial for addressing these issues by creating additional housing stock and improving living conditions. However, the GST imposed on these projects has adversely affected both developers and homebuyers.
The non-availability of Input Tax Credit (ITC) has increased costs for homebuyers and slowed demand in an already sluggish market. Domnic Romell, President of CREDAI-MCHI, emphasized the financial strain caused by current GST regulations, stating, “The GST implications on redevelopment and rehabilitation projects have placed an undue burden on both developers and homebuyers.
We urge the government to reconsider these charges, particularly for projects involving the rehabilitation of slum dwellers and residents of unsafe, dilapidated buildings.” The real estate sector, one of the largest employers in both organized and unorganized sectors, is crucial for economic revival.
As Mumbai attracts top talent and faces rising housing demand, the city’s geographic constraints hinder its ability to accommodate the growing population effectively. CREDAI-MCHI also highlights other pressing issues, including GST on Transfer of Development Rights (TDR) and the Rs 45 lakh limit for Affordable Housing benefits.
Additionally, developers face costs for constructing both rehabilitation and sale buildings, paying GST at rates of 18% or 12% without ITC. Despite these costs, GST authorities have levied GST on the rehabilitation component of schemes, resulting in slum and dilapidated building occupants being required to pay GST on flats they already own.
This levy is seen as anti-poor and contrary to the spirit of the GST regime, amounting to double taxation. The organization advocates for greater flexibility, proposing that developers should have the option to choose between the 12% GST rate with ITC or the 5% rate without ITC.
This flexibility would help ensure ITC cost savings are passed on to homebuyers while allowing developers to continue delivering large-scale affordable housing projects. CREDAI-MCHI remains committed to working with the government to address these issues and drive growth in the real estate sector while ensuring the availability of affordable and safe housing for Mumbai’s residents.
CREDAI-MCHI is the apex body representing the real estate industry in the Mumbai Metropolitan Region (MMR). The organization aims to promote the development of the real estate industry in the region and address the concerns of its members.
information on GST The Goods and Services Tax (GST) is a comprehensive indirect tax levy on manufacture, sale, and consumption of goods and services across India. It was introduced in 2017 to replace multiple taxes levied by the central and state governments.
CREDAI-MCHI is a leading real estate organization in India, representing over 2,000 member developers across the Mumbai Metropolitan Region. The organization aims to promote the development of the real estate industry in the region and address the concerns of its members.
Frequently Asked Questions
What is the current GST rate for real estate projects?
The current GST rate for real estate projects is 12% or 18% without Input Tax Credit (ITC).
What is the impact of GST on redevelopment projects?
The GST imposed on redevelopment projects has increased costs for homebuyers and slowed demand in an already sluggish market.
What is the proposal of CREDAI-MCHI to address the GST issues?
CREDAI-MCHI proposes that developers should have the option to choose between the 12% GST rate with ITC or the 5% rate without ITC.
What is the significance of the real estate sector in economic revival?
The real estate sector is one of the largest employers in both organized and unorganized sectors and is crucial for economic revival.
What is the aim of CREDAI-MCHI?
CREDAI-MCHI aims to promote the development of the real estate industry in the Mumbai Metropolitan Region and address the concerns of its members.
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