The proposed move by the National Anti-profiteering Authority (NAA) to investigate property developers for not passing on the benefits of lower taxes under the goods and services tax (GST) is a new tool to harass real estate firms, said developers Business Standard spoke to. NAA’s report on Monday said the authority has received many complaints against the developers for not passing on to the developers.
“There is unnecessary harassment for developers whenever a new policy comes up. In fact, there is out of pocket expense for developers even after charging GST to buyers,” said Getamber Anand, chairman of ATS Infrastructure and chairman of Credai (Confederation of Real Estate Developers Association of India), an industry body.
“We want the government to bring down the GST rate to 6 per cent from 12 per cent now,” Anand said. He said there was a lot of misunderstanding about the GST among buyers and the government.
“It is a harsh measure (the authority probing developers). All developers pass on the benefit to buyers. There should be due time given to developers. The GST has become a harrassing tool,” said Shailesh Puranik, managing director at Puraniks, a Mumbai-based developer.
Demonetisation, Real Estate (Development & Regulation) Act, or Rera, and the GST have impacted the sales and cashflows of developers, giving a spurt in consolidation in the sector.
About 94,000 units were launched in the top seven cities of the country during the nine months of 2017, which is a drop of 55.7 per cent from the same period in 2016. In the corresponding period last year, 2,12,000 residential units were launched, according to Anarock Property Consultants.
However, the last quarter of 2017 looks encouraging — in the first two months of this quarter, around 18,000 units were launched, which is around 90 per cent of the new launches in Q3 2017, Anarock data said. The sales of residential units, nationally, also declined by 29.3 per cent. Only 1,59,000 units were sold during first nine months of the current calendar year, compared with 2,25,000 in the corresponding period of 2016. Owing to this, unsold units in India declined by 8 per cent between Q3 2016 and Q3 2017. This decline was primarily due to restricted new launches amidst the green shoots of sales recovery.