APRIL 22, 2014
APRIL 22 — Generally, there is a misconception that residential properties will not be impacted by GST. It is expected that unless developers absorb the cost increase of approximately three per cent, the implementation of GST may cause increase in residential property price too.
Though residential property is exempted, the material cost like cement, steel, bricks, labour work will be subjected to GST and the developer will not be able to claim any input tax credit. As such, the Government should look into the possibility of zero rating on affordable homes to reduce the impact of GST to home buyers.
The Government should also provide clear guidelines to consumers on whether GST will be levied on residential property on commercial land, service apartment and SOHO (small Office/Home office).
It is recommended that GST be exempted for all residential condominium built on commercial land. The reason being commercial lands in Klang Valley, Penang and also Johor are being used to build residential condominiums due to scarcity of land. This will invariably raise the new property price if standard rate of six per cent GST applies.
During my recent participation in GST discussions groups, I received disturbing feedback that GST charges of six per cent may also be applied to car park lots, furnished furniture and fittings of new condominiums and also high rise residential units to be launched by developers after April 1, 2015. Car park lots are essential for condominiums and should not be subjected to GST.
Should this be true, an additional GST incurrence of RM1,200 for a car park lot which cost RM20,000 would be passed on to home buyers via the sale price although residential properties is GST exempted.
Therefore I call upon the Government to address these issues, explain to the public and conduct comprehensive consultation with the relevant stakeholders to seek appropriate solutions that will benefit everyone.
* Datuk Chua Tee Yong is MCA Vice President and Member of Parliament for Labis.
** This is the personal opinion of the writer or his organisation and does not necessarily represent the views of the Malay Mail Online.
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