GST rollout a setback for real estate in city, no new constructions started
DEHRADUN: Last year’s demonetisation and the July 1 rollout of Goods and Services Tax have affected the already struggling real estate sector.
Dehradun alone has over 100 group projects where thousands of flats are under different stages of construction. Real estate industry insiders say that building maps of over 14 projects have been cleared by the Mussoorie Dehradun Development Authority (MDDA) till June end but no new construction has started in the hill capital.
A city-based builder Sharad Aggarwal said, “The cost implications of the GST on the real estate market are now showing up as the raw material whether iron, steel, sand or other things have grown up between 10 and 15 per cent. And this has slowed down the work at sites.”
He added, “Now buyers will have to pay 15 % GST at the time of purchase of the flat. If a flat cost around Rs one crore, then Rs 15 lakh will have to be paid as GST. And this will be a big trouble for builders everywhere.”
The real estate business has become more complex after GST. Unlike other businesses, purchase of a flat is a long process and the entire exercise has several components. “Unlike other businesses, money involved in the real estate is big. The input cost has increased between 10% and 15% and at present the builders are keeping documents of purchases and paying the GST. However, its adjustment and correlation with the pricing is going to be a complex thing,” said Kirti Sharma, another builder.
He agreed that GST would bring in more transparency but there would not be much benefit for the buyers. “The appreciation of property prices would be slower now in the city and the prices have fallen,” Sharma said.
Experts said that the real effect will be on projects nearing completion as the cost would be higher. “Buyers would have to pay 15% GST as per the slab and the builder will have to work out the GST calculation of the project before selling the flat, this makes things complex for everyone,” said an industry insider.