GST on under-construction flats slashed | Fusion - WeRIndia

GST on under-construction flats slashed

GST on under-construction flats slashed

In order to boost the real estate sector (building and construction industry), the GST Council has slashed the GST rates on under-construction flats and affordable housing units.

The new rates will be effective from the next financial year i.e. April 1.

The GST on under-construction flats has been reduced to five per cent from 12 per cent without an input tax credit.

And the GST on affordable housing units has been slashed to one per cent from the current eight per cent.

After the 33rd meeting of the GST Council, the Finance Minister Arun Jaitley said that the GST rates on under-construction properties and ready-to-move-in properties that do have completion certificates have been reduced to five per cent without the benefit of ITC.

Generally, builders have to transfer the benefit amount to the extent of input tax credit. But, it is not being passed to the buyers of the flats. In this context, the government reduced the GST rate without the benefit of input tax credit, after considering one-third abatement on land cost.

Similarly, the GST rate has been reduced to 1 per cent on affordable housing units.

The houses that cost up to ₹45 lakhs and measuring 60 square metres carpet area in metro cities like Delhi-NCR, Mumbai-MMR, Kolkata, Bengaluru, Chennai, and Hyderabad and 90 square metres in non-metro areas fall under the category of affordable housing.

The Minister said that one can get a two-bedroom house in the carpet area of 60 square metres and three-bedroom house in non-metro areas in the area of 90 square metres.

He expressed this reduction would be helpful for common public and helps the government achieve its target of House for All by 2022.

However, some builders said that the developers will have to face a challenging time due to non-reduction of the GST on cement which is taxed at the highest bracket. Moreover, the reduction in GST will not come into effect immediately; hence, there won’t be a huge increase in the sales of houses immediately.

Image Credit: Tiven Gonsalves / CC BY-SA 4.0

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