The CREDAI has urged the central government to reconsider the proposition of charging 18% GST on FSI/Additional FSI Charges paid to local authorities for real estate projects.
The Confederation of Real Estate Developers’ Associations of India (CREDAI), is the apex body for the real estate industry in India.
GST on FSI Charges: CREDAI Seeks Exemption for Real Estate Sector
In a letter to the Union Finance Minister, the Confederation of Real Estate Developers’ Associations of India (CREDAI), asked the Central Government to think again about its plan to charge 18% GST (Goods and Services Tax) on FSI/Additional FSI charges made to local governments for real estate projects.
CREDAI says that this move would have a big effect on project costs, which would cause house prices to rise by about 10% in some parts of the country.
CREDAI said in a statement that putting GST on these fees, either going back in time or from now on, would greatly impact both housing demand and supply because it would be very bad for the economy and the business.
CREDAI also says that making it clearer how GST applies to these kinds of payments would cause real estate developers to have a lot of unplanned costs and problems planning their finances for projects that are still going on and projects that are already finished.
Because of this, there may be financial pressures that stop growth and put at risk the finances of people who have invested in these projects to buy homes.
Even a possible application would greatly increase the cost of building, putting more financial strain on end users and making housing even less affordable.
The industry is already struggling with rising costs of raw materials, and these new fees will make it economically impossible for affordable housing projects to happen.
This could cause prices to rise by 7–10%, which will directly affect the purchasing power of middle-class people, who make up 70% of all homebuyers.
Additionally, developers are not allowed to claim ITC (Input Tax Credit) on GST. This will add to the costs and result in double taxes, which will directly cause prices to rise.
GST on FSI Charges Could Deter Housing Supply and Demand: Boman Irani, CREDAI President
Boman Irani, President of CREDAI, said, “FSI/Additional FSI charges make up a big part of the project cost. The proposal to put 18% GST on these charges could backfire and stop people from buying or renting homes because they will have to pay more money and the prices will go up as a direct result.”
“We strongly ask and suggest that the government keep the FSI free from GST.” Any charges, past or future, could shake the financial foundations of many projects, making it harder for developers to get control on time, he said.
Essentially, CREDAI believes this new GST rule would make homes more expensive and create problems for both developers and buyers.
For flats for sale in Chennai, Contact the Roofandfloor Team!