This March could be a washout for property developers as many homebuyers are delaying their construction-linked payments to April after the government reduced the goods and services tax (GST) rates on under-construction properties, but made it applicable from April 1.
According to sources, collections of developers in March have come down by 60-80 per cent due to this.
Last month, the GST Council reduced GST on under-construction properties, from 12 per cent to 5 per cent for under-construction properties and cut GST rates on affordable housing from the current 8 per cent to 1 per cent.
“In affordable housing, there is no problem, but in premium housing, collections are slow,” said Vijay Wadhwa, chairman of Mumbai-based Wadhwa group, one of the biggest developers in Mumbai.
Wadhwa hoped April will see a good jump in collections.
“March will be a slow month for sales and collections. Developers must be geared up for this,” said a managing director (MD) of a Mumbai-based non-banking financial company.
Anuj Puri, chairman of property consultant Anarock Capital, said: “I have been hearing this from developers. Homebuyers must be thinking they can wait and pay 7 per cent less later.”
DLF, the country’s largest listed developer, is unaffected as it does not sell under-construction properties, said its chief executive Rajeev Talwar.
Meanwhile, developers hoped that the GST Council, which is scheduled to meet on March 19 to finalise guidelines to support the changed tax rate structure for under-construction houses, would clear the air.
Ashish Puravankara, MD, Puravankara, said that since the decision of reducing GST rates, the collection at Puravankara has remained more or less steady.
“The customers, who bought homes during this quarter or earlier, will fall in the ambit of the previous GST slab regime. Hence, no particular impact. With the new rates being implemented from April onwards, we are expecting a rise in queries and sales as homebuyers will get the full benefit of the reduced GST,” said Puravankara.