Facility of pre-tax credit on commercial real estate leased from the real estate sector

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Budget 2021 Expectations: The real estate industry has been looking for a pre-tax facility on commodities such as cement, steel used in the development of commercial real estate to be let. The real estate industry says the facility of input tax should be provided for in the tax on income from rental of commercial real estate. Pre-Budget suggestions from the real estate sector on Sunday said the move would also help India maintain its growth in sectors such as information technology (IT), startups, real estate companies and consultants.

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Industry association Confederation of Indian Industry (CII) has demanded amendment to Section 16 and Section 17(5) of the Central Goods and Services Tax (CGST) Act in the suggestion for Fiscal Year 2021-22 to allow the construction of real estate companies To utilize of Input Tax Credit (ITC) on the purchase of goods and services during the period. The organization said that the unavailability of ITC will trap real estate developers’ capital.

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CII said: “Less on commercial property rentals or point-of-sale rentals in shopping centers attracts a GST of 18 percent. Unavailability of ITC during construction increases construction costs and leads to loss of working capital. This affects the whole supply chain Sanjay Dutt, Managing Director (MD) and Chief Executive Officer (CEO) of Tata Realty and Infrastructure Limited said that under the existing provisions of GST, the pre-load is not available during the construction phase, however its benefit must be given to reduce construction costs.

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