The rollout of the eagerly awaited Goods and Services Tax (GST) may lead to a reduction in property prices in Pune since developers will be able to offset their liabilities against the raw material that is used during the construction cycle according to the additional commissioner of central excise, Surendra Mankoskar. He also added that real estate prices should naturally come down as a result and also stated that this new tax has ample provisions to act against the developers who are involved in profiteering which is also clearly defined.
Mankoskar has stated that real estate prices in Pune are expected to be lowered by approximately Rs.600-700 per sq. ft. since the set-off provision is available across 160 diverse items that are used for construction purposes. Mankoskar’s statement, however, is seen as a contradiction of the statements made by the real estate body about the property prices. As per the developers’ body CREDAI, the impact of the Goods and Services Tax (GST) can be ascertained only after a few days. According to Shantilal Kataria, the President of CREDAI, things cannot be predicted accurately at this juncture and he added that construction costs are unlikely to come down. Kataria also talked of how prices of apartments are dependent on several factors including the construction stage, amount received from sale and so on.
Developers have all along maintained that prices of property are unlikely to be reduced in the near future but the central excise department has issued a clear warning to developers, highlighting the anti-profiteering clause present in the GST act. This new act can lead to any real estate firm being de-registered in case the benefits are not passed onto customers.
Mankoskar also stated that this clause can be used against those real estate developers who do not give the benefits of lower property rates to their customers. He added that in the interaction between the central excise and realty players in the city, this point has been made very clear to the latter. He also talked of how a circular has also been issued in this regard.
Mankoskar also stated that there will be a negligible difference in prices of metal since earlier there was VAT, excise duty and local taxes which together came to around 4%. This addressed questions regarding jewelers claiming increases in gold prices due to 3% GST. He talked of how people should confront jewelers in Pune who claim that gold and silver prices will increase after GST. He added that GST has already led to other taxes being scrapped and before GST customers had to fork out 1% in excise duty, 1% as the local body tax for gold and 1.2% VAT.