BENGALURU: Planning to build or buy your dream home? You may want to hold on for some time, as developers led by the Confederation of Real Estate Developers‘ Association of India (Credai), Bengaluru, are trying to convince the Karnataka government to cut or abolish stamp duty and registration fees in the wake of the goods and services tax (GST) being implemented from July.
If the move is successful, you will definitely save some money. “Else, it is expected to burden home buyers by 10%15%,“ say some industry leaders. Suresh Hari, secretary, Credai, Bengaluru, confirmed they will soon submit a petition to chief minister Siddaramaiah, seeking either to abolish or reduce stamp duty as it is expected to hurt home buyers with the introduction of GST. Though GST was introduced to eliminate multiple taxation, he said the real estate sector will be an exception because home buyers are bound to pay GST along with stamp duty and registration fees, which account for 5.6% of the property value. “GST and RERA will certainly add to overheads of the industry and increase housing prices by 10%-15%. It’s time the state government steps in to protect home buyers by either abolishing or reducing stamp duty levied on all immovable property after implementation of GST,“ Hari said.
Harish Achar Brahmavar, founder and director, Homz N Space, said property prices will remain unchanged, comparing the current VAT and service tax ratio in Karnataka to 12% GST.If the Karnataka government continues with double taxation system (GST + Stamp Duty), property prices may go up and home buyers may have to take the burden even after GST is implemented, he added.
“It’s better if the Centre includes stamp duty under GST or provides some subsidy on stamp duty for land and plot purchase under Prime Minister Narendra Modi‘s Housing for All by 2022 scheme,” he added.
Suresh Kris, executive director & CFO, Brigade Group, said considering the excise duty impact on cost of construction, the customer may get 2% to 3% benefit after GST is rolled out.
“Once the benefit on cost is passed on to the customer, the reduction on overall price could be in that range,“ he pointed out.
Bhojya Naik, deputy inspector general of registration, corroborated this view, saying current taxes on housing projects account for nearly 28% in Karnataka where VAT is significantly higher, compared to other states. But with the proposed slab of 12% under GST, home buyers are expected to get a minimum rebate of 5%-6% on taxes.