The Goods and Services Tax Council, comprising state and federal finance ministers, announced a cut in GST charged on sales of all housing projects which were not in the affordable housing category
New Delhi: Following union finance minister Arun Jaitley's announcement regarding the final decision on the GST rate after disagreement by non-BJP states, the Goods and Services Tax Council bore good news for homebuyers and builders. The council announced a reduction in the GST charged on sales of residential properties under construction.
The new rate on all housing projects will be 5 percent, down from the current 12 percent, and the tax on affordable housing projects has been reduced to 1 percent from the current 8 percent. The cut in the rates will be implemented from April 1.
Houses with a carpet area up to 60 sq meters in metro cities and those with a carpet area of up to 90 sq meters in non-metro cities will be classified under affordable housing. The definition of affordable housing has also been altered by the council and it said that affordable housing will comprise of any house which is built on an area of 60 square meters or less in the metro cities of India.
The proposed bid to reduce GST on the under-construction houses to a maximum of 5 percent without input tax credit (ITC) has been welcomed by developers. "We are looking forward to five percent GST without ITC though it will hurt the builders in the short run. We expect the demand for under construction housing will revive and will offset the impact in the long run," Credai Bengal president Nandu Belani told PTI.
The new rates will benefit the government also since the current 12 percent GST prompts buyers to opt for ready-to-move-in properties that are exempt from this high tax.
The Council deferred its decision regarding lotteries and the Group of Ministers (GoM) would meet again to tackle the issue. Currently, state-run lotteries attract 12 percent GST, while state-authorised ones attract 28 percent.
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Last Updated Feb 24, 2019, 6:29 PM IST