The FM is considering proposal to tax builders to pay tax on unsold stock

A real estate developer's key role is to construct properties and sell them. But when sentiments are poor, more often than not the unsold inventory starts to pile up. So should the developer be taxed on these unsold properties, even if these are not rented out? Well, the major response would be 'no'. However, as mentioned in the Economic Times, the government is considering asking builders to pay taxes on unsold stock, which would be computed on the basis of annual letting value. What this could lead to is realtors taking up measures to clear off the inventory which would include reducing prices, something that seems required in India. However, whether this will be implemented or not remains to be seen as the Finance Ministry is considering this proposal. It may be noted that there are over 760,000 apartments that remained unsold at the end of June this year. Bringing in such a move would be a major setback for developers, but a positive for buyers.