The Goods and Services Tax Council's nod to slash tax on real estate highlights the government's intent to boost buying and selling of homes, according to Mahindra Lifespace Developers Ltd.'s Managing Director and Chief Executive Officer Sangeeta Prasad.
“A distinct 7 percent cut in both segments of the markets [is] a message...that the intent of the government is to boost buying and selling of homes which was muted in the past,” Prasad told BloombergQuint. “There is virtually no arbitrage between under-construction and fully-finished goods.”
The quashing of input tax credit, however, would pressure margin and pricing, Prasad noted. “Input tax credit, in the short run, will create a little bit of imbalance in the market,” she said, adding that the government's initiatives like these are done with an intent to create demand and would stabilise the market in a longer run. “These initiatives...would bring in more transparency than opacity.”
Real estate data analytics company Liases Foras' Pankaj Kapoor argued that the government should have instead maintained the input tax credit as the removal of it would open up avenues to deploy black money again into the sector.
Watch the full interview here:
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