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How Indian realty’s GST rate cut will benefit NRIs

The real estate sector would be better positioned to brave the challenges once NRIs are incentivised to return to the market. Non-resident Indian property investors and buyers stand to benefit significantly from an impending tax cut that has been proposed by a panel in a bid to give the much-needed fillip to the lackluster Indian…

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How Indian realty’s GST rate cut will benefit NRIs

The real estate sector would be better positioned to brave the challenges once NRIs are incentivised to return to the market.

Non-resident Indian property investors and buyers stand to benefit significantly from an impending tax cut that has been proposed by a panel in a bid to give the much-needed fillip to the lackluster Indian real estate sector.

The possible Good and Services Tax (GST) rate cut to 3 per cent and 5 per cent (from 8 and 12 per cent) in affordable and in other categories, respectively, will not only be a big boon to property buyers from within and outside of India but also trigger the rebound of the $120-$130 billion real estate industry currently languishing in the doldrums, realty pundits said.

They said the beleaguered real estate sector, of late caught in a web of new reforms, would be better positioned to brave the challenges once the NRI segment is incentivised to return to the market through the GST cut proposed for all under-construction residential properties.

The tax cut, recommended by the Group of Ministers (GoM), will definitely attract more NRIs to the real estate sector that is expected to touch $1 trillion by 2030, resulting in an overall positive impact on the Indian real estate market, said analysts.

Realty experts believe the GST cut would lead to reduction of home prices by as much as Rs300,000 for super built-up area of 1,000 sqft However, others believe the net benefit will depend on the percentage of input taxes forgone under the proposed regime.

“For NRIs, it will be a major boon because they largely invest in under-construction properties as they buy it more for investment purpose and not largely for their end-use. Thus, a flat 5 per cent rate of GST on under-construction homes without the ITC would provide an indubitable and transparent benefit to NRI buyers as well,” said Shajai Jacob, CEO for the GCC at Anarock Property Consultants.

“The tax cut will be a big stimulus for the industry and will prompt a revival of interest among NRI investors and home buyers, who have been getting less and less enthusiastic because of the flagging fortune of the property market,” said Oommen Iype, managing director of Anne’s Tortilla Mexican Food.

“For NRIs, the stimulus move is certainly positive, offering a major incentive to take a relook at the property market, which has been grappling with slow demand in the wake of GST introduction and demonetisation. The proposed tax cut appears to augur a bounce back for the industry by rekindling demand from overseas investors,” said Shahul Hameed, managing director of Thani Technical Enterprise.

“The reported recommendation from GoM to reduce GST rates to 3 per cent and 5 per cent respectively in affordable and in other categories, will breathe a new life in to the sector. The existing GST regime has been a major deterrent for sales in under-construction projects,” said Shishir Baijal, chairman and managing directorof Knight Frank India.

The seven-member GoM, headed by Gujarat’s deputy chief minister Nitin Patel, will finalise its recommendations within days and then submit its recommendations to the GST Council, which will take the final decision on the proposal.

Currently, GST is levied at 12 per cent with input tax credit (ITC) on payments made for under construction property or ready to move in flats where the completion certificate has not been issued at the time of sale.

The effective pre-GST tax incidence on such housing property was 15-18 per cent. GST, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in price of the property after the rollout of the GST, tax experts explained.

“The ongoing 12 per cent GST rate levied on under construction properties proved to be a major deterrent for several homebuyers, particularly NRIs since it was seen as an extra burden of nearly 6-8 per cent on their pockets. Dissatisfied with this added burden on their pockets and thereby on their overall returns, they postponed their buying decisions. While back in India, most buyers preferred ready-to-move-in properties [with completion certificates] that were exempt from this tax,” said Jacob.

Analysts said 2019 seems to be opportunistic for affordable and mid-income housing segment along with investments opportunities from NRI buyers at large. There has been an upsurge in ready to move in units owing to Rera and GST benefits. Under construction projects are expected to see a massive push too once the GST rates are reconsidered.

The Indian real estate sector is expected to contribute 13 per cent to the country’s gross domestic product by 2025. In 2017, the realty sector contributed about 6-7 per cent to India’s GDP. The sector is expected to touch $1 trillion by 2030, becoming the third-largest globally.

Apart from its contribution to India’s GDP, the growth of this sector holds significance as it is the third largest employer, after agriculture and manufacturing, in the country and presently employs over 50 million people.

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Issac John

Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE’s mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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Saudi Aramco says customers unaffected by Houthi attack on Jeddah

Monday’s attack knocked out a tank that contained 10 percent of all fuel stored a the Jeddah plant, Saudi Aramco official says.Oil giant Saudi Aramco says customers were unaffected by an attack by Yemen’s Houthi rebels on a petroleum products distribution plant in Saudi Arabia’s Red Sea city of Jeddah. One of the facility’s tanks…

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Saudi Aramco says customers unaffected by Houthi attack on Jeddah

Monday’s attack knocked out a tank that contained 10 percent of all fuel stored a the Jeddah plant, Saudi Aramco official says.Oil giant Saudi Aramco says customers were unaffected by an attack by Yemen’s Houthi rebels on a petroleum products distribution plant in Saudi Arabia’s Red Sea city of Jeddah.
One of the facility’s tanks was hit by a missile in early on Monday.
The attack knocked out 10 percent of all fuel that was stored at the plant, a Saudi Aramco official said on Tuesday, adding that the tank – one of 13 at the facility – is currently out of action.
The official described the site as a “critical facility” that distributes more than 120,000 barrels of products per day.
A fire caused by the attack was extinguished in about 40 minutes with no casualties, he said.
The attack was confirmed by a Saudi official who told the Saudi state news agency (SPA) it was a “terrorist attack with a projectile”.
The oil company’s production and export facilities are mostly in Saudi Arabia’s Eastern province, more than 1,000km (621 miles) away from Jeddah, across the country.
Announcing the attack, a military spokesman for the Houthis warned that “operations will continue”.
Yahya Sarea said the attack was carried out with a Quds-2 type winged missile. He also posted a satellite image with the label: “North Jeddah bulk plant-Saudi Aramco”.
“The strike was very accurate, and ambulances and fire engines rushed to the target,” Sarea said.
That facility is just southeast of Jeddah’s King Abdulaziz International Airport, an important site that handles incoming Muslim pilgrims en route to nearby Mecca.
Renewed violence
Yemen has been mired in conflict since a Saudi-led coalition intervened in March 2015 to restore the Yemeni government, which had been removed from power in the capital Sanaa by Houthi forces in late 2014.
Cross-border attacks by Houthi forces have escalated since late May when a truce prompted by the novel coronavirus pandemic expired. The Saudi-led coalition has responded with air raids on Houthi-held territory.
The Houthis control most of north Yemen and most large urban areas. They say they are fighting a corrupt system.
Sarea said the attack was carried out in response to the Saudi-led coalition’s actions in Yemen.
The claimed attack came just after a visit by outgoing US Secretary of State Mike Pompeo to Saudi Arabia to see Crown Prince Mohammed bin Salman.
The kingdom also just hosted the annual G20 summit, which concluded on Sunday.

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US appoints first Venezuela ambassador in a decade amid tensions

The two nations have not exchanged ambassadors since 2010 when relations began to fray under late President Hugo Chávez.The United States has its first ambassador for Venezuela in 10 years despite Washington having no diplomats at its Caracas embassy amid a breakdown in relations. James Story’s nomination as ambassador was confirmed on Wednesday by a…

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US appoints first Venezuela ambassador in a decade amid tensions

The two nations have not exchanged ambassadors since 2010 when relations began to fray under late President Hugo Chávez.The United States has its first ambassador for Venezuela in 10 years despite Washington having no diplomats at its Caracas embassy amid a breakdown in relations.
James Story’s nomination as ambassador was confirmed on Wednesday by a US Senate voice vote.
The South Carolina native takes the job that he will carry out from the capital of neighbouring Colombia as Venezuela endures an historic economic and political crisis.
The US and Venezuela have not exchanged ambassadors since 2010 when relations first started to fray under late President Hugo Chávez.
The two nations totally broke diplomatic ties last year, each withdrawing its diplomats shortly after Washington backed Venezuelan opposition leader Juan Guaidó as the country’s leader.
Story, 50, will likely play a key role in helping guide US policy on Venezuela during the transition of President-elect Joe Biden.
Biden’s win has sparked debate among those who back President Donald Trump’s hardline approach of isolating his Venezuelan counterpart Nicolas Maduro and others who say it is time for a new course.
The critics say heavy sanctions have failed to remove Maduro from power, opening Venezuela to US competitors such as China, Russia and Iran, while making life harder on millions of residents of the South American nation.
The US leads a coalition of dozens of nations that rejected Maduro following his election in 2018 to a second term in a vote Washington called fraudulent.
The US has since heavily sanctioned Maduro, his inner circle and the state-run oil firm, attempting to isolate them.
The Trump administration offered a $15m reward for Maduro’s arrest after a US court indicted him on drug charges.

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‘UAE, Israel can stamp out Islamophobia, anti-Semitism’

People to people contact, academic, civil society exchanges and cooperation will go a long way in change mindsets, Ban Ki-moon says. Countries like the UAE and Israel who have signed the Abraham Accords should stamp out anti-semitism and Islamophobia and devise curriculums to educate their youth on the significance of the peace deal, said former…

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‘UAE, Israel can stamp out Islamophobia, anti-Semitism’

People to people contact, academic, civil society exchanges and cooperation will go a long way in change mindsets, Ban Ki-moon says.

Countries like the UAE and Israel who have signed the Abraham Accords should stamp out anti-semitism and Islamophobia and devise curriculums to educate their youth on the significance of the peace deal, said former UN chief Ban Ki-moon.
He said that one of the major achievements of the deal – considered a huge political and diplomatic win – is that it opens up a “cooperative space not only for leaders but also for citizens of all the participating countries”
“The architects of this important agreement must ensure that the Accords is not an agreement just for their countries but for their people. Abraham Accords should serve as a launchpad for the sustainable peace and prosperity in the region,” Ban Ki-moon said while addressing a virtual conference on ‘The Abraham Accords: Advancing UAE-Israel, Regional, and Muslim-Jewish Cooperation’ organised by UK-based Emirates Society.
Stressing on the important role of education in building secure, peaceful, resilient and prosperous societies in both a short and long term, the Secretary General said it is his “sincere hope that the UAE and Israel and others redouble their sustained effort to educate their students and citizens – both young and old – about the significance of this important agreement and each other.”
“Devising curriculum and expanding global citizenship education as well as being aggressive about stamping out instances of anti-Semitism and islamophobia are important steps to take in this regard, he added.
He said people to people contact, academic, civil society exchanges and cooperation will go a long way in helping to change mindset and begin a dynamic new era of cooperation.
Palestinian cause
The UAE is the first GCC country and the third Arab nation to establish diplomatic relations with Israel by signing the US-brokered Abraham Accords on September 15. Bahrain and Sudan also followed suit and have signed peace deals with Israel.
The deal is considered a game changer for peace and stability in the region, as in exchange, Israel has agreed to temporarily halt annexations in the West Bank.
Reem Al Hashimy, Minister of State for International Cooperation, said the UAE continues to consider the issue of a Palestinian state as the most important one but without impeding opportunities for dialogue and open communication.
She said Abraham Accords was born from a “desire to change the business as usual approach” that has mired the countries of Middle East in conflict for long.
Even as the UAE continues to work for its own national agenda, Al Hashimi said the country is “really looking to learn from each other and also to explain to one another who we are and what matters to us”.
“And it does matter to the Arab and the Muslim world that a Palestinian state in its rightful place … exists.”
Ban Ki-Moon said it would be difficult to forge lasting peace without addressing the Palestinian question as well as issues like the final status of Jerusalem and West Bank settlement.
“To truly advance the vision of peace throughout the Middle East, we should not forget that the Palestinians must be involved in determining a future that is based on security and prosperity for all people in the region. I hope that Abraham Accords can function as a springboard for invigorated action on ensuring a negotiated two-state solution aligned with the relevant UN security council resolutions.”
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Anjana Sankar

Anjana Sankar is a UAE-based journalist chasing global stories of conflict, migration and human rights. She has reported from the frontlines of the wars in Yemen and Syria and has extensively written on the refugee crisis in Bangladesh, Iraq and Europe. From interviewing Daesh militants to embedding with the UAE army in Yemen, and covering earthquakes, floods, terrorist attacks and elections, she has come out scathe-free from the most dangerous conflict zones of the world. Riding on over 14 years of experience, Anjana currently is an Assistant Editor with Khaleej Times and leads the reporting team. She often speaks about women empowerment on her Facebook page that has 40,000 plus followers.

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