In the pre-GST arena, VAT was 1.25 per cent and the service tax was 4.5 per cent, taking the total tax outgo to 5.75 per cent. This has now increased to 12 per cent, which has been passed on to the buyers.
Rajender, who is also a member of the GST Council, asked builders to provide details on tax components after deducting the input credit tax they would claim for cement, steel, hardware, sanitary materials and others.
“The State is of the opinion that lower taxes will enhance compliance. We will take up the matter with the GST Council to get the tax rate, after taking into account the input tax credit, to be around 6 per cent,” he said at the first Credai Real Estate Awards for Telangana (CREATE- 20017) ceremony here on Thursday.
He mentioned that the GST Council had first suggested a 18 per cent GST for real estate. It was Telangana that first took a stand opposing the high tax and made efforts to bring it down to the current 12 per cent. The State has been addressing the difficulties of the real estate industry through various reforms, he said.
Deputy Chief Minister Kadiam Srihari asked the developers and builders to adopt villages and take up affordable housing projects, where the units are priced around Rs 10 lakh.
Credai Telangana president G Ram Reddy said the real estate industry has been through some turbulence due to global financial crisis, then due to the agitation for Telangana and now due to demonetisation and GST. However, Telangana had been periodically taking measures to boost the business confidence, he said.
“For a Rs 50 lakh project, about Rs 9 lakh additional is needed for GST and registration. Many prospective buyers were delaying decision due to this,” said Ch Ramchandra Reddy, the lobby body’s general secretary.