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

"Though residential property is exempted, the costs of materials such as cement, steel, bricks and labour will be subject 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 housing to reduce the impact of GST on house buyers," MCA vice-president Chua Tee Yong said in a statement today.
 
Chua, an accountant and second term MP for Labis, also urged the government to ensure that residential buildings built on commercial land are exempted from GST.
 
"Commercial land in the Klang Valley, Penang and also Johor is being used to build residential condominiums because of the scarcity of land. 
 
"This will invariably raise the new property prices, if the standard rate of six percent GST applies," he said.
 
Chua said 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 can cost RM20,000, would be passed on to house buyers via the sale price, although residential property is GST exempted.
 
"Therefore, I call upon the government to address these issues, explain to the people and conduct comprehensive consultation with the relevant stakeholders to seek appropriate solutions that will benefit everyone," Chua added.
 
The GST Bill has been passed by the Dewan Rakyat and is scheduled for implementation on April 1, 2015.

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