Govt mulls to tax unsold real estate inventory

Unsold inventory lying with the real estate developers after one year of construction may be taxed at the rate of 8 to 10 per cent depending on the value of the property held.

The government aims to address the urban housing affordability issues through this move. Real estate developers tend to hold back inventory to secure better pricing, the act is equivalent to hoarding in the commodities market.

To curb this mentality and to make more homes available to buyers at fair price, government had in the Union Budget 2017 proposed to work out ways to make unsold property lying as inventory chargeable under the 'Income from house property' clause.

Consumers are expected to benefit from this move as it may bring down the property prices, while organized sector real estate developers who do not indulge in such practices will benefit from the renewed consumer interest in the now sluggish real estate market.

Nifty Realty was up 2 per cent, while the S&P BSE Realty was up by 1.69 per cent at 10:40 hours on Wednesday. Among real estate stocks, Prestige was trading at Rs. 340.00 per share, up by 8.45 per cent, Sobha was at Rs. 578.30, up 7.73 per cent, HDIL was at Rs. 62.45, up 1.63 per cent, Godrej Property was at Rs. 726.15, up 1.50 per cent, Oberoi Realty was at Rs. 495.70, up 1.31 per cent, Indiabulls Real Estate was at Rs. 218.50, up 1.13 per cent, Phoenix was at Rs. 514.95, up 0.74 per cent. While, Omaxe, DLF and Unitech were trading in the negative territory.