Apart from tax relief, he also proposed an increase in threshold limit for affordable homes and benefit of the input tax credit in the Mumbai Metropolitan Region
To bring relief to Mumbai’s real estate sector from the current slowdown, Maharashtra Finance Minister Sudhir Mungantiwar has sought goods and service tax (GST) cut on redevelopment projects from the GST council. Apart from tax relief, he also proposed an increase in threshold limit for affordable homes and benefit of the input tax credit in the Mumbai Metropolitan Region (MMR) on September 11.
If the proposal is accepted, GST levied on the redevelopment of old buildings and slums will reduce from 5 percent to 1 percent. In his submission, he said the construction through the Slum Rehabilitation Authority (SRA) doesn’t bring a significant return to the developer as the houses go to the original residents with no extra cost. And the burden of redevelopment falls on the developer.
The minister suggested increasing the threshold for affordable housing to Rs 75 lakh from Rs 45 lakh. He pointed out that the state government had planned to provide affordable houses near commercial areas in MMR. However, sticking to the guidelines of providing an area of up to 60 sqm, with a ceiling of Rs 45 lakh is tough and therefore, the ceiling should be raised.
GST council is also asked to allow the benefit of input tax credit (ITC) to help the sector. A spokesperson from the Builders Association of India feels that these new implementations will bring relief in the two-year recession in the realty sector.
Mungantiwar noted that reduced GST revenues might be a concern for the council, but good quality housing at affordable rates will provide an overall favourable environment.