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V Nagarajan: Impact of Goods and Services Tax on Indian residential projects
July 22, 2018
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I am planning to invest in a residential project in Bengaluru? Is GST applicable to all types of residential projects? Please clarify. Pradeep, Dubai. 
The impact of Goods and Services Tax (GST) on residential property in India depends on the phase of construction, the location as well as the type of project. For example, GST impact will be observed more in case of new launches as compared to near completion projects. Similarly, projects in suburban areas will be more impacted when compared to city-centre projects.

Affordable or value housing projects will see larger impact when compared to luxury housing. This is on account of different proportion of land cost in project cost (land cost exempted from GST), different GST applicable to different materials, amount spent split in pre GST time and post-GST time and on account of lower GST for affordable housing projects.  
 
I have built a villa in my home town in Kochi and included my wife’s name as co-borrower for home loan purposes. Can she claim deduction towards principal and interest paid on home loans? Krishna Kumar, Sharjah.
Your wife can claim tax benefits separately, in proportion to her shareholding in the property. In case the shareholding is not mentioned in the purchase deed, you can execute an agreement on a stamp paper, mentioning the shares in the property, and claim tax benefits separately.

 
The eligible deduction is up to Rs 200,000 per annum separately, on interest paid towards a self-occupied house, and also up to Rs 150,000 per annum towards principal amount repaid to the home loan lending institution.

While selling my apartment valued at Rs6 million, the buyer says TDS will be deducted from the sale amount. Is TDS compulsory while buying property in India?  Kindly clarify. Parikh, Sharjah.
 Yes. As per the new provisions under section 194-IA of the Income-tax Act, in case you are buying certain immovable property in excess of Rs5 million, you are required to deduct TDS (tax deducted at source) at the rate of one per cent from the payments made to the seller. Non-deduction of TDS may result into penalty and prosecution. The obligation is on the purchaser to deduct TDS.   
 
Notes:

The rate of increase in realty prices in the top 10 Indian cities slowed down to 6.7% (year on year) in the January-March 2018 quarter as against 7.2% in the previous quarter and 10.4% a year ago. 
 
The RBI’s quarterly data reflects the transaction data received from housing registration authorities in the 10 major cities of Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi. 
 
The National Housing Bank’s Residex showed that prices across 39 cities in India have been showing signs of recovery. Home prices rose 8.5% in Kolkata, 5% in Hyderabad, 2.8% in Mumbai and 3.3% in Delhi during the March quarter as compared to the year-ago period. The highest price increase was in Lucknow. In Maharashtra, the highest price increase was in Panvel (8.6%) followed by Thane (6.5%). 
 
RERA EFFECTS
 
Real estate sector dipped by 8% from May 2017 to May 2018, in the wake of the implementation of RERA, according to the data from Indeed.  While the sector is still recovering from the aftermath of RERA, the act’s stipulated compliances and regulations are expected to unlock potential job opportunities in various capacities. These measures have been taken by the Government to facilitate a healthy restoration of the people’s confidence in the realty sector. However, the number of job searches in the sector has increased by 8% during the same period, the report added.
 
According to the report, post the implementation of the RERA, job seekers with experience in civil engineering, electrical engineering, marketing & sales, mechanical engineering, project management, architecture, management & administration, accounting, communications and legal profiles have shown significant interest in working in the real estate sector.
 
The data further indicates that Noida is the leading city in India for those seeking job opportunities in the real estate sector, followed by Mumbai and Bengaluru. An interesting observation is that the real estate job opportunities are actively looked for by job seekers in the senior age bracket, i.e. in the 51-65 year age group.

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The author is a business analyst
covering Indian property markets

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