Realtors' body Naredco today urged the government to halve the GST rate for the sector to 6 per cent to boost demand for under-construction housing projects.
Naredco said in a statement that it has "requested the government to fix GST rate for the real estate sector at 6 per cent from the current rate of 12 per cent".
The demand was made by the association in a meeting with Finance Secretary Hasmukh Adhia and Minister of State for Finance P Radhakrishnan.
The GST rate for under-construction projects is 12 per cent whereas for ready-to-move-in properties it is 0 per cent, the realtors' body said.
Under the special schemes for affordable housing, the effective rate for housing projects with unit sizes up to 60 sq metres is presently 8 per cent.
The industry body has requested a GST rate of 6 per cent for all housing projects across the board.
The Naredco delegation was represented by its Chairman Rajeev Talwar and President Niranjan Hiranandani.
"We are requesting government for a GST rate of 6 per cent with input tax credit. We feel a step like this would go a long way in boosting demand. The buyers stand to benefit as developers would pass on the benefit to the buyers," Talwar said.
The government would benefit as well as it will collect more tax because of increase in demand, he added.
According to Naredco, capping GST at 6 per cent will incentivise buyers to invest in under-construction properties and not wait for completed properties to save 12 per cent GST.
Hiranandani said: "Land cost is the most significant part of the project cost in a real estate project. The abatement of 30 per cent for land cost is not enough and it should be pegged at 50 per cent, even though the land cost in cities like Mumbai and Delhi NCR it may go up to 60-70 percent of the property cost.
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