CHENNAI: Your house will cost more by three per cent to four per cent from April 1 as developers will be brought under new GST regime without Input Tax Credit, according to developers.
Ajit Kumar Chordia, president, Confederation of Real Estate Developers Association of India (CREDAI), Tamil Nadu chapter, told Express that the removal of Input Tax Credit is a retrograde step. “The houses in the Rs 45 lakh-Rs 1 crore range will be costlier by 3-4 per cent but expensive homes in the margin of Rs 10,000 per square foot (above Rs 2 crore), will be cheaper by 3-4 pc.”
Chordia said that properties inside the city would not be affected but those outside the city such as Old Mahabalipuram would be hit. However, it won’t have any impact on affordable homes. They will continue to remain neutral, he said.
S Sridharan, vice-president, (CREDAI) Chennai, welcomed the transition plan approved by the GST Council on Tuesday for the implementation of the new tax structure. “This will not have any impact on the ongoing projects wherein the Input Tax Credit (ITC) will be available,” he said. Under the transition plan, the developers of residential projects which are incomplete as on March 31, 2019, will now have the option either to choose the old structure with ITC or to shift to the new 5 per cent and 1 per cent rates, without ITC.
Sridharan said that this comes after GST Council slashed tax rates for under-construction flats to five per cent and affordable homes to one per cent, effective April 1, 2019.
Vice-chairman of Builders Association of India K S Ramaprabhu said the developer who spends seven to eight per cent by paying GST on construction materials will have to bear the brunt after the input tax credit has been denied. “We have no other way but to pass it on to the consumers,” he added. On a whole, consumers are going to benefit from the new tax regime, said developers.