Developers finally feel the need for completing high-end residential projects with buyers moving after ready-to-move residential units. The latter option doesn’t require the buyer to pay the GST (Goods and Services Tax) unlike that in the projects under construction.
Construction work is being speeded up by the mid-sized and big realty firms that possess healthy credit lines, especially the luxury projects.
The era before the implementation of GST demanded only 6% Service Tax including Value-Added Tax. Whereas, the scene has changed now with the consumer having to pay 12% GST on under-construction projects as per the tax regime that came into effect the previous year. Another 5% is charged from the buyer as Stamp Duty, which is not included in GST.
On the contrary, the ready-to-move residential units are free from the influence from the GST and only charge the buyers 8% tax, which is relatively small. But only if those apartments acquire Occupancy Certificate. This is the reason why buyers are falling for ready-to-move units.
Projects that have reached half-way in construction are being avoided by the consumers while many are waiting for the completion of projects to keep aloof from any possible risk. Thus, the builder is not left with any other choice but escalate the progression of the residential projects, especially the high-end ones.
People are even willing to pay a bit more to avoid the high GST charges, which is rightly assured to them by the ready-to-move units as against the under-construction ones. The high GST rate at present has deterred the purchase of homes as consumers wait for projects to get completed.
With the number of Occupancy Certificates acquired by developers reaching to as many as 6 projects in just one and a half years, it is evident that the progress of under-construction projects has gone ahead by 8 to 9 months than the actual deadline.
The only way out for the builders to increase home sales and simultaneously relieve the buyers of the heavy GST charges is to complete the pending residential projects. The focus has thus, shifted from the launching of new projects, at present.
As seen in the data by a leading property advisory, the number of available ready-to-move units is 4800 in the first half of the present year, which is higher than that of the corresponding period in 2017 by 23 per cent. These units fall under the price range of more than 2 crores.
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