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Wednesday, April 23, 2014

Property to COST MORE due to GST - MCA warns

Building material and cost of labour will be subjected to the impending goods and services tax (GST), which MCA warned will increase prices of residential properties.

"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," said MCA vice-president Chua Tee Yong in a press release today.

Chua, a trained accountant and second term MP for Labis, also urged the government to ensure that residential buildings built on commercial land be exempted from GST.

"Commercial land 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 6 percent GST applies," he said.

He added that discussions with various interest groups recently revealed that the GST may also be imposed on parking lots, furniture and fittings for new condominiums.

"Should this be true, incurring an additional GST 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, explains to the public and conduct comprehensive consultation with the relevant stakeholders to seek appropriate solutions that will benefit everyone," he said.

The GST Bill has been passed by the Dewan Rakyat and is scheduled for implementation on April 2015.


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