As per experts, the GST and the recently implemented RERA shall revise property prices upwards by 10-20%. Though, a tax rate of 12% shall apply uniformly on under-construction or new property projects and the tax out-go for an individual buying a property is increased anyway between 7.0%- 8.25% (considering that VAT does not applies in the state where the property is being purchased).
Realty developers are of the view that GST shall result in rationalization of prices and also bring about greater degree of transparency in the system. However, more clarity shall be known in respect of taxes after June 30, 2017.
Factors that can bring about the price spike in property rates
. 1. GST rate of 12% as compared to the current service tax rate of 3.75% to 4.5%
2. More tax on Input items in the industry: Steel, shall with the roll out of GST, attract a tax rate of 18%, the price pressure shall be passed on to the overall costing of the project.
3.High volatility in price of cement: Construction material, cement, in recent times has witnessed comparable variations in respect of its price. So, any big movement will impact the overall price sentiment of the industry. The slab rate for cement has been decided at 28%.
4. Minimum wages are due to be increased for labour workforce which shall also increase the overall cost, which developers would then be passing on to end-consumers.
So, with lower home rates and at the time when property developers across the country are desperate to clear of their inventory ahead of GST roll-out at discounted rates. The time is just right to zero-in on the best deal as property prices will be bound to head northwards in not so distant future.