Rating agency CARE expects the implementation of Goods and Services Tax will result in reduction in property prices. Currently, real estate developers pay various non-creditable taxes including excise duty, customs duty, entry tax, etc. on the procurement side. The buyers pay service tax and VAT on purchase of residential apartments when booked prior to their completion.
?The proposed goods and services tax (GST) will replace these multiple taxes with a single tax and will also ensure smooth flow of credits through the chain. Hence, it is expected that GST will reduce the construction cost incurred by the developers and thereby help in reducing the current level of property prices,? Care Ratings said.