June 2, 2023: The government should remove GST applicability on flats given free to existing occupants in redevelopment projects, realtors’ body Credai (Confederation of Real Estate Developers’ Association of India) has said. This would make undertaking such projects more financially viable, especially in the Mumbai Metropolitan Region, it added.
A delegation from Credai and Credai-MCHI (Maharashtra Chamber of Housing Industry) met finance minister Nirmala Sitharaman and made a formal representation over this issue.
“The flats to existing occupants/slum dwellers/tenants/flat owners are provided free of cost and hence no GST should be charged where there is no consideration,” it said.
The cost of construction of rehabilitation was already subsumed in the cost of sale component, it added.
“Currently, providing new houses to existing occupants/tenants/flat owners/slum dwellers (output service) and selling the flats/shops/offices (sale component) in the open market are being viewed as separate transactions, leading to higher tax obligations,” it said.
“Sale component is already offered for GST and hence in effect value of construction of rehab is also offered for GST being within it. In effect, 10% GST is currently being charged on flats (5% on rehab and 5% on sale both borne by ultimate consumers) being sold from the sale component,” it added.
Credai national president Boman Irani emphasised on the need for regulatory and taxation adjustments to support redevelopment projects. These adjustments would enhance economic value, foster demand and supply, and benefit low- and middle-income segments of the population in a bustling city such as Mumbai, he said.
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