GST causes 6-month delay in DBR housing project

Kothagudem: Double bedroom housing projects are in for a six-month delay, as the contractors are slowing down the construction, keeping in mind the burden of GST.

Contractors want the government to announce relief on the GST. The cost of each DBR house is being raised to Rs 5.04 and Rs 6.04 lakh, after the 18 per cent GST on building material, one per cent cess on labour charges and another one per cent on other charges.

At present, contractors have stopped  works and are waiting for the government’s decision. About 4,115 houses have been sanctioned in the second phase to the engineering department of Bhadrachalam ITDA that covers four districts – Bhadradri-Kothagudem, Mahaboobabad, Khammam and Hayasankar-Bhupalapali.

The Bhadradri district has to complete 2,615 DBR houses, Khammam to 1,100, Bhupalapalli to 300 and 110 to Mahaboobabad district.

The first phase of construction is not impressive. For example, about 160 DBR homes were sanctioned to Mahaboobabad in the first phase, but no house was completed so far. The situation in Bhupalapalli is somewhat better, with contractors completing 70 houses against 142 houses, 500 against 1,100 in Khammam and 1,000 against 1,315 in Bhadradri district.

An official said, “The contractor categorically told them that the construction work cannot begin until they get some clarity from the government over the GST”.
As per the GO MS No. 10, a DBR house should be built on 560 square yards, using quality material. Earlier, the contractor used to pay Rs 25,000 in the form of VAT and Rs 5,000 in the form of cess. But this changed after the GST regime. There is absolutely no chance of escaping  GST.