The Association of Certified Realtors of India (ACRAI) has appealed to the housing ministry to reduce the 18% goods and services tax (GST) levied on brokers on the brokerage they earn from builders on each transaction. “We have appealed to the ministry to reduce GST on our services from 18% to 5% to help us overcome distress and give better job opportunities to our community in coordination with the GST Council,” said ACRAI president Ravinder Aggarwal. Additionally, in a letter to the GST Council, brokers have appealed that real estate agents be exempted from GST on services provided for affordable housing. Brokers said they were grappling with a slowdown in sales and finding it difficult to survive as builders refused to pay GST levied on sales.
“No builder is ready to pay GST on the brokerage. The channel partners are already squeezed; this is just an additional burden,” said Irshad Ahmed, president, National Association of Realtors. The bodies representing brokers, including ACRAI and the National Association of Realtors, had also appealed to the central committee to revoke the 5% penalty on brokers. “The finishing and delivery of projects is not in our hand. We are only a marketing arm and dependent on the information provided by the developers and authorities,” said Aggarwal. The service tax levied on real estate agents’ services was increased to 14% from 12% in June 2015, just before GST was levied on realtors. The GST rate applicable for all services rendered under the heading ‘real estate services’ on a fee or commission basis or contract basis and for services by way of renting of residential dwelling for use as residence is exempt from GST. Other rental services attract GST at 18%.
The residential real estate sector had a choppy ride in 2018, with initial indications of recovery followed by a liquidity crisis. However, housing sales increased 12% and new residential supply 27% quarter on quarter in January-March this year owing to sops in the interim budget, GST rate cuts and lowering of home loan rates following the Reserve Bank of India’s recent repo rate cut, according to ANAROCK Property Consultants. Further, overall unsold inventory in the top eight cities of the country saw a 1% decline during the first quarter of 2019 compared to the preceding three-month period. Unsold housing stock stood at around 665,000 units at the end of the quarter.