High tax rates hampering realty

Vijayawada: High percentage of taxes collected by the State and Central governments from the builders and apartment flat buyers for the construction of apartments as well as for registration of flats is hampering the realty sector in the capital region of Amaravati. 

After bifurcation of the state in 2014, builders invested several hundred crores for the construction of apartments in and around Vijayawada, Guntur, Mangalagiri and Tadepalli. Now, taxes like GST became a big hurdle for the sale of flats. Taxes collected by State and Central governments from the builders and apartment flat buyers hampering the progress of realty sector.

Middle class families are struggling to pay 12 GST to the Central government for registration of flats. Minimum 2BHK flat price is Rs 30 lakh on the outskirts of Vijayawada.  The property buyer has to spend 20 per cent of the value for registration i.e; 12 per cent GST and 7.5 per cent stamp duty.

This is amounting to Rs 6 lakh. If the tax is reduced, the flat buyer can spend the money on cup boards and interior decoration of the flat. Middle class families are eagerly waiting for the reduction in GST percentage for registrations. More than 20,000 flats are either under construction or at the final stage of construction in the capital region of Vijayawada, Guntur, Mangalagiri and Tadepalli.

Realtors, who are organising the property show in Vijayawada, felt that the government should reduce the GST to encourage the middle class families to purchase flats. The builders are spending nearly 30 per cent of the total cost in the land in the form of taxes to the government.

Taxes are being paid for registration of land, to get building plan, payment of NALA Tax, Vacant Land Tax (VLT), labour cess and mining cess. Ultimately, all these expenses have to be borne by the customer. Though the banks are reducing the interest rates to 8.50 per cent per annum for housing, several thousand flats are remained unsold due to high taxes, said Potluri Venkatesh, a builder in Vijayawada.

The SBI recently organised the property show at A Convention Hall and within a month, CREDAI, too, organised the property show three days from January 5 to 7 at the same venue.  N Surendra, a visitor to the property show at A Convention Hall, on Sunday said the Central government should reduce the GST as part of the housing for all policy. He said the objective of the government can be fulfilled if the tax rate is slashed.  

Realtors are spending huge amount for publicity so that they could sell the flats. But the market is continuing at a sluggish pace, said A Siva Reddy, president of CREDAI, Andha Pradesh. He felt the government should reduce the GST to encourage middle class to buy flats.  

Spiralling prices of building material, bricks, hardware is leading to further escalation of prices of flats. The state government can reduce the taxes for building permissions, VLT and NALA Tax.