Builder pulled up for not passing GST gain to buyers

In a setback for real estate developers, the National Anti-Profiteering Authority has held that homebuyers cannot endlessly wait to get the benefit of input tax credit (ITC) for GST payments as the law does not provide that the gain should only accrue on completion of the project. Nearly two years after the launch of GST, several builders have not passed on the benefit of credits earned for taxes paid on inputs such as steel, cement and paint, arguing that
the amount will be settled at the time of delivery. In fact, this is one of the key reasons for the government to shift to a new structure where tax credits will not be available. Rejecting Bengaluru-based Sattva Developer’s contention that real estate business was market-driven, spread over four-five years and the pricing depended on multiple factors, the anti-profiteering body pointed out that the realtor had itself admitted to a gain of Rs 9 per square foot and said that the right methodology will be to link the ITC benefit as a ratio of turnover. The Director-General of Anti-Profiteering (DGAP) had estimated the ITC-to turnover ratio at 7.8% after the introduction of GST, compared to 5.1% in the pre-GST period. Based on these calculations, DGAP had estimated the amount “profiteered” at a shade under Rs 1 crore in the builder’s Laurel Heights project, which was questioned by Sattva Developers.

Source: The Times of India, Monday 17 June 2019

The half-yearly realty report card

The Indian real estate sector has grown exponentially over the last couple of years. From an unorganized sector to being one of the most globally recognized sectors, it has come a long way indeed. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. It is also expected that this sector will incur more non-resident Indian (NRI)
investments in both the short term and the long term.

Market Size: Real estate sector in India is expected to contribute 13% of the country’s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs. What has bolstered the demand for commercial spaces is the growth of sectors such as IT and ITeS, retail, consulting and e-commerce in recent times. This sector is seeing unprecedented growth with office space leasing in some major cities expected to cross 100 million square feet during 2018-20.

Source: Mid-Day, Friday 28 June 2019

Too young for making an investment in property?

Seeing one’s nameplate on the door is an individual’s ultimate dream. However, there are several factors that determine the time to go for the big buy. One of them is the age-factor. While it is an important criterion for the bank/financial institution, to determine your home loan duration it is also very important to calculate your savings for the initial down payment amongst other things. What youngsters need to consider: Planning the budget for a home is of paramount importance for a first-time buyer. 1) For a first home purchase, set aside a budget that is affordable and in-line with your career growth and pay scale. 2) Ensure that you have savings of up to 20-25% of the value of the house, prior to purchase, while the rest could be from a home loan. 3) Maintain sufficient balance in your savings, for emergencies and other investments like marriage, family, vacations, further education, vehicle, etc. While most banks provide loans of up to 85% of the property value, youngsters need to first check the EMI that they would be comfortable paying each month.

The pros: Some of the advantages of buying a home at an early age are: 1) It allows youngsters to invest in their future, as it provides them with an asset that can be sold when they are ready to move on. 2) Youngsters tend to learn better spending habits. It changes the young buyer’s decision-making process, as they learn how to save and spend money in the most effective and efficient manner. 3) As home buyers get tax credits, youngsters can use it
for lowering their tax liability. 4) Owning a property can provide a steady source of income for a young person and also offer him/her insurance against any setback. The cons: However, exposure to property investment too early in life comes with some inherent risks like 1) Young investors may not be able to relocate in the interest of career if they are tied down to one location due to property investment. 2) There is also the temptation to overshoot budgets, resulting in steep EMIs. 3) Social pressures lead to over-shooting of budgets, resulting in steep EMIs that leave too little for other needs of a young couple.

Source: Mid-Day, Friday 28 June 2019

Mumbai in Asia’s 20 most costly cities: Mercer

Mumbai is India’s most expensive city and among the top 20 costliest cities surveyed in Asia for expatriates, as residential housing prices remain among the highest in the world, a survey by global consulting leader Mercer says. According to Mercer’s 25th Annual Cost of Living Survey, Mumbai fell 12 spots and was ranked at the 67th position of 209 cities surveyed.
Regarding Mumbai the report said, “costs of items such as eating out and utilities show a decline, however, residential housing costs remain among the most expensive in the world, contributing to its top rankings in Asia and globally”. The other Indian cities in the list include New Delhi at 118th place, Chennai (154), Bengaluru (179) and Kolkata (189). All the four cities have moved down from last year. “A relatively slower price increase in surveyed Indian cities and major currencies weakening against the US dollar has pushed our Indian cities down in the ranking,” said Padma Ramanathan, India Global Mobility Practice leader at Mercer. The survey noted that eight out of the top 10 of the world’s most expensive cities for expatriate are Asian cities, resulting from high costs for expatriate consumer goods and a dynamic housing market. The costliest city in the world for the second consecutive year is Hong Kong followed by Tokyo, Singapore, and Seoul. Other cities appearing in the top ten list are Zurich (5), Shanghai (6), Ashgabat (7), Beijing (8), New York City (9), and Shenzhen (10).

Source: Business Standard, Saturday 29 June 2019


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