{"id":3235,"date":"2018-12-28T15:08:25","date_gmt":"2018-12-28T15:08:25","guid":{"rendered":"http:\/\/financeintellect.com\/home-page\/home\/?p=3235"},"modified":"2018-12-28T15:08:25","modified_gmt":"2018-12-28T15:08:25","slug":"gst-rate-cut-in-2019-a-new-year-gift-for-homebuyers","status":"publish","type":"post","link":"https:\/\/financeintellect.com\/home-page\/home\/gst-rate-cut-in-2019-a-new-year-gift-for-homebuyers\/","title":{"rendered":"GST Rate Cut in 2019 &#8211; A New Year Gift for Homebuyers?"},"content":{"rendered":"<p style=\"text-align: center\"><strong>By Anuj Puri, Chairman, ANAROCK Property Consultants<\/strong><\/p>\n<p>A possible GST rate cut at the very beginning of 2019 could bring in the much-needed respite for the Indian residential sector, which is still reeling from reformatory changes. Though ANAROCK data indicates that sales numbers picked up by nearly 16% in 2018, sales are still far from their peak levels.<\/p>\n<p>The ongoing 12% GST rate levied on under-construction properties has proved to be a major deterrent for home buyers, who understandably shied away from this added burden on their finances.<\/p>\n<p>ANAROCK&#8217;s consumer sentiment survey also confirms that the prevailing GST rate has prevented as many as 49% of property seekers from buying under-construction homes liable for GST. They preferred ready-to-move-in homes that were exempt from this tax.<\/p>\n<p>To attract home buyers and kick-start a more convincing revival of the residential sector, the GST Council is now considering reducing the GST rate for under-construction homes during its next meet in January 2019.<\/p>\n<p>In fact, this move was expected in December 2018; nevertheless implemented, it will be a perfect New Year bonanza for millions of aspiring home buyers looking to buy under-construction homes in the coming year.<\/p>\n<p>Currently, the GST Council is considering two proposals. The first is to maintain a fixed 12% GST rate, including full input tax credit (ITC) to builders. This will eventually make the effective GST rate 8% once the input cost of land is accounted for and reduced. It would, in fact, bring it on par with the prevailing affordable housing tax rate.<\/p>\n<p>The second proposal stipulates a flat 5% GST to be applicable to under-construction properties without including the input tax credit benefit, provided the builder purchases at least 80% of the raw materials from GST-registered suppliers.\u00a0While these proposals are still under review and discussion, here&#8217;s how much home buyers could potentially save under each proposal if it is implemented:<\/p>\n<p>Scenario 1: If 8% GST is levied, a home buyer will save as much as Rs. 1,60,000 on a property with a super built-up area of 1,000 sqft (carpet area 780 sqft) and priced at Rs. 6,000 per sqft.<\/p>\n<p>Scenario 2: If a flat 5% GST is levied, a home buyer will save Rs. 300,000 on a property with same area and price mentioned above.<\/p>\n<p>Obviously, either of these two scenarios presents buyers of under-construction homes with a palpable financial benefit and can push housing sales a lot higher than in the present.<\/p>\n<p>There is also speculation that the government could consider reducing the GST rate for cement and bring it under the 18% slab from the current 28% rate. Any reduction on this basic input cost could certainly boost the prospects for under-construction properties which are currently in low in demand &#8211; provided builders pass the benefit on to their consumers.<\/p>\n<p>Such a deep GST rate cut on cement would boost supply deployment and thereby also help create more construction jobs and thus boost the economy. The incumbent government&#8217;s manifesto includes housing and infrastructure development, both of which are major cement consumers, as well as employment generation.<\/p>\n<p>Given the upcoming general elections, a combined rate cut on under-construction housing as well as cement would, therefore, meet multiple criteria which can have a direct impact on voter sentiment.\u00a0Will the government indeed present the real estate sector with such a windfall of a New Year&#8217;s gift? If so, the real estate industry, home buyers and the economy at large would certainly have a lot to rejoice over.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Anuj Puri, Chairman, ANAROCK Property Consultants A possible GST rate cut at the very beginning of 2019 could bring in the much-needed respite for the Indian residential sector, which is still reeling from reformatory changes. Though ANAROCK data indicates that sales numbers picked up by nearly 16% in 2018, sales are still far from [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":3236,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[6],"tags":[2987,2988,2986,1835],"class_list":["post-3235","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion-makers","tag-consumer-sentiment-survey","tag-employment-generation","tag-indian-residential-sector","tag-infrastructure-development"],"aioseo_notices":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GST Rate Cut in 2019 - A New Year Gift for Homebuyers? - Finance Intellect<\/title>\n<meta name=\"description\" content=\"A possible GST rate cut at the very beginning of 2019 could bring in the much-needed respite for the Indian residential sector, which is still reeling from reformatory changes. 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