The construction and real estate industry should push to bring the entire sector under GST ambit as early as possible to solve major problems of the sector, says Manish Kumar Sinha, Group of Ministers on Real Estate under GST regime, on Wednesday.
Speaking at an interactive session on 'Decoding Union Budget - A Real Estate Perspective' organised by FICCI, Sinha assured the industry full support from the government. "Government is very sensitive to this sector and doing the best it can," he said.
Last week, a group of state finance ministers (GoM) led by Gujarat Deputy Chief Minister Nitinbhai Patel recommended 5 per cent goods and services tax (GST) for under construction properties and 3 per cent GST for affordable housing sector without input tax credit. Currently, there is 33 per cent abatement on the tax (at 12 per cent) levied.
The Minister said that the government is aware that real estate is one of the key sectors, which provides jobs and contributes, directly and indirectly, around 8-10 per cent to the GDP.
While addressing the industry representatives, Sinha highlighted that post-GST, tax rates have come down to 12 per cent which was 20 per cent earlier. To boost the affordable and mid-segment housing, availability of credit is essential for growth, he added.
In the interim Budget 2019, Finance Minister Piyush Goyal announced a slew of measures for real estate sectors. This includes extending the exemption period for levy of tax on notional rent on unsold inventories to two years and also exempt the levy of income tax on notional rent on a second self-occupied house.Sanjay Dutt, Chairman, FICCI Real Estate Committee and MD and CEO, Tata Housing Development and Tata Realty and Infrastructure, said that the demand in the office sector is growing strongly, but on the other hand, the demand of residential space has not seen that kind of growth and is currently where it was few years back. In order to bring back the demand, he suggested that the developers should construct, design and build houses keeping in mind the end-user.
During the event, the Minister released the FICCI-EY White Paper on 'Indian Real Estate: Demystifying the new tax and regulatory environment' which highlighted the key tax and accounting issues impacting the real estate sector.
Speaking on the occasion, Gaurav Karnik, National Leader, Real Estate, Ernst & Young LLP said that the release of paper seeks to outline some of the income tax issues which need clarity from the government which would go a long way in reducing litigation, result in better compliance and at the same time provide relief to the sector. He also said that the reasonable rates along with seamless utilization of input tax credit coupled with lower stamp duty may be considered by the government so that the real estate sector can continue on its recovery path.
Edited by Chitranjan Kumar