Rationalise GST: Andhra builders

Visakhapatnam: Worried over a huge increase in construction cost at a time when they are hit by the fallout of the pandemic, the apartment builders across Andhra Pradesh have urged the State Government for rationalisation of GST.

Now GST at the rate of five per cent is being collected for registration of flats without Input Tax Credit (ITC) while charging one per cent to units under affordable housing ventures.

Credai AP joint secretary P Koteswara Rao told Bizz Buzz that they want the consideration of flats up to 1,200 square meters under affordable housing definition in view of changing market dynamics. At present, the ceiling for consideration of one percent GST under affordable housing is fixed at 900 sq. meters.

Due to the high rate of GST even after middle class housing projects, many are not coming forward to buy. Almost 70 to 80 per cent builders in Visakhapatnam, the main commercial hub of Andhra Pradesh construct apartments in plots ranging from 500 to 2,000 square yards. Due to restrictions, most of the area has common amenities.

Another overwhelming demand from the real estate sector is with regard to mandatory procurement of 80 per cent of construction material and manpower from GST-registered dealers. Small-time builders generally cannot access GST-registered dealers. In a developed city like Visakhapatnam and Vijayawada, many cannot afford procurement of workers from GST-registered dealers. There are also not many dealers supplying workers.

Credai members want that instead of 80 per cent, it should be brought down to 60 per cent to benefit almost all those involved in apartment construction. At present, if someone procures only 70 per cent from GST approved dealers, he has to shell down a penalty of 18 per cent towards GST under reverse mechanism-considered very high for the construction sector, a builder bemoaned.