Reduced GST on leasing would have helped in the market recovery: Experts
They feel reduced GST on leasing would have helped in the recovery of the office space segment, which has been the most impacted sector due to the work-from-home norm.
Multiple property consultants say office space leasing across the country has dropped by over 50% and it might take two years for the sector to recover completely from the setback of Covid-19.
“The office space, which has been the most impacted sector due to the work-from-home scenario, could have been recognised in this Budget, a reduction in stamp-duty duty for commercial real estate, offering single-window clearance and reduced GST on leasing would have helped in the market recovery,” said Rajat Johar, country head, Skootr, a premium managed office space provider.
In its budget recommendations, CII had said that Section 16 read with Section 17(5) of the CGST Act should be amended to enable real estate players to avail ITC on procurement of goods and services during the construction phase where the said immovable property is intended for commercial leasing or renting.
“Developers who operate the asset have been seeking input tax credit on leasing. The government in the budget could have given some direction to the GST council, as operators of any rental asset, be it warehousing or data centres, were seeking this relief,” said Gaurav Karnik, partner and national leader-real estate at EY India.
Manas Mehrotra, founder of co-working firm 315Work Avenue, said the Budget could have had some specific measures for the co-working sector to enable its higher growth.
“As co-working is playing a vital role in the economic growth of the country, the government could have recognised it under special schemes like REIT to handhold the industry for better growth. As the industry is going competitive, it would have been good if the rate of TDS on co-working services was reduced,” said Mehrotra.
The post-lockdown scenario is bringing in a wave of new opportunities for the co-working players as companies seek out alternative options to reduce costs and capital expenditure.
As companies look to resume business, redesigning and restructuring of existing real estate will pose yet another challenge. However, co-working spaces will be able to respond to design changes required post-Covid quickly and more efficiently than traditional office spaces.