Monday, 25 February 2019

GST rate on affordable housing slashed

GST Council, on Sunday, slashed GST on affordable housing to 1%, down significantly from the previous 8%. Further, the Council also also lowered the GST rate on other under-construction housing properties to 5% from an effective 12%.

The decisions came at the 33rd meet of the GST Council. Here are the details :-

The rates come into effect from April 1 this year

"We wanted to give a boost to the real estate sector as well as give relief to the middle class, neo-middle class and the aspirational middle class class. This will come into effect 1 April 2019," Finance Minister Arun Jaitley told reporters.

Which properties are considered affordable housing

Properties which have a maximum price of Rs. 45 lakh, and have carpet area of up to 60 sq meters in metro cities, or up to 90 sq meters in non-metro cities will fall under the 'affordable housing' slab and will be charged 1% GST.

Under-construction properties that fulfill the aforementioned criteria will also fall under the affordable housing slab.

However, taxes cannot be adjusted

However, there's a catch. Unlike the case earlier, builders will not be able to adjust taxes paid on raw materials like cement and steel with the final tax liability on under-construction housing projects.

Builder lobbies had long been demanding a tax reduction

The decision by the GST Council to slash taxes on housing is broadly based on the recommendations of a ministerial panel headed by Gujarat Deputy Chief Minister Nitin Patel.

It also comes on the backdrop of long-standing demands by builder lobbies like the Confederation of Real Estate Developers' Association of India (Credai) and the National Real Estate Development Council to slash GST rates.



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