Prestige Estates Projects Limited , a prominent real estate developer, has disclosed that its subsidiary, Prestige Office Ventures, has received a show-cause notice from the Directorate General of Goods & Services Tax Intelligence, Hyderabad. The notice alleges non-payment or short-payment of goods & services tax (GST) and non-reversal of input tax credit during the period from February 2020 to March 2024.

Details of the Show-Cause Notice

The tax authorities have proposed a demand of ₹160.82 crore, along with an equivalent penalty and applicable interest. According to the notice, Prestige Office Ventures is required to appear before the Additional/Joint Commissioner, Hyderabad CGST Commissionerate, within 30 days of receiving the show-cause notice.

Company's Response

Prestige Estates Projects has stated that they consider the demand not maintainable. The company is currently evaluating the matter and plans to take appropriate action. In its disclosure to the stock exchanges, Prestige Estates emphasized that it does not anticipate any material impact on its financials, operations, or other activities as a result of this notice.

Market Reaction

Despite the news of the GST show-cause notice, Prestige Estates Projects' shares closed positively in the latest trading session. The stock ended at ₹1,588.70, marking a 1.48% increase for the day.

Regulatory Compliance

In compliance with the Securities and Exchange Board of India (SEBI) regulations, Prestige Estates Projects has made the necessary disclosures to the National Stock Exchange of India Limited and BSE Limited. The company's prompt disclosure aligns with the transparency requirements set forth by SEBI under Regulation 30 of the Listing Obligations and Disclosure Requirements.

As the situation develops, stakeholders will be watching closely to see how Prestige Estates Projects addresses the allegations and navigates the regulatory process. The company's confident stance regarding the non-maintainability of the demand suggests that it may contest the notice, potentially leading to further developments in this matter.

Prestige Estates Projects , a leading real estate developer, has taken significant financial and strategic actions recently. The company has issued a corporate guarantee worth ₹1,000.00 crore for loan and construction finance availed by its wholly owned subsidiary, Prestige Acres Pvt Ltd. This guarantee provides financial backing for the subsidiary's borrowing requirements.

In a separate development, Prestige Group has expressed strong disapproval of the Karnataka government's recent decision to increase property registration fees. Irfan Razack, Chairman and Managing Director of Prestige Group, labeled the move as 'unfair' to homebuyers, particularly given the current market conditions.

Fee Hike Details

The Karnataka government has announced a doubling of property registration fees from 1% to 2%, effective August 31. This increase pushes the total property transaction fees from 6.60% to 7.60%. To put this into perspective:

• For a ₹1.00 crore property purchase, the additional cost burden is ₹1.00 lakh
• The timing of this hike coincides with a period of reduced registrations due to regulatory challenges, such as e-khata implementation

Impact on Real Estate Market

Despite his criticism of the fee hike, Razack expressed confidence that the real estate business would not be significantly impacted, citing healthy market conditions. He highlighted several positive factors:

• Strong IT sector performance
• Increased commercial space leasing to Global Capability Centres in key cities like Bengaluru, Pune, Hyderabad, and Chennai
• Continued job creation in these sectors

However, Razack did caution about potential market slowdown if property prices breach affordability barriers. He emphasized that the current market drivers include a strong economy and positive sentiment.

Appeal for GST Input Tax Credit

Razack also used this opportunity to appeal for the reinstatement of input tax credit in the upcoming GST Council meeting. He stated that the removal of this credit has caused an 18% increase in costs for the real estate sector.

Market Response

The market seems to have reacted positively to Prestige Group's stance and overall market outlook. Prestige Estates Projects shares closed 1.42% higher at ₹1,584.00 on the National Stock Exchange (NSE).

Looking Ahead

While the property registration fee hike presents challenges, Prestige Group's leadership remains optimistic about the real estate market's resilience. The company's ability to navigate these regulatory changes and maintain investor confidence will be crucial in the coming months.

As the real estate sector adapts to these new fees, all eyes will be on the upcoming GST Council meeting and any potential relief measures for the industry. Meanwhile, the corporate guarantee issued for Prestige Acres Pvt Ltd demonstrates the company's commitment to supporting its subsidiaries' financial needs and growth strategies.