Confederation of Real Estate Developers’ Association of India (CREDAI) has urged the government to minimise double taxation of the real estate sector by treating land as zero rate under Goods and Service Tax (GST).
While GST is an indirect tax liability for other sectors, its 12% rate is only a fraction of the tax burden for the real estate sector, said CREDIA president Jaxay Shah, in a press note.
“The real estate sector is exceptional because GST regime does not eliminate multiple taxation. Stamp duty, levied by the states on all immovable property, would continue to remain in force even after implementation of GST,” he pointed out.
Shah elaborated, “Firstly, the additional burden on real estate on account of stamp duty averages from 5% to 8% of the value of the immovable property. Secondly, the stamp duty is payable on every transaction. Thirdly, stamp duty is levied by the state governments on circle rates or guideline values of property which are arbitrarily determined and far in access of the value at which transactions take place.”
Unless abatement for land is allowed, Shah felt that the cost to end consumer would go up. “CREDAI would, therefore, urge the government to minimise double taxation of real estate by treating land as zero rated under the GST regime. The positive multiplier effect of real estate on other industries would make up for the revenue loss, and the nation would be thankful for a tax regime consistent with the objective of Housing for All by 2022.”