GST on flats to be reduced | Fusion - WeRIndia

GST on flats to be reduced

GST on flats to be reduced

The Goods and Services Tax (GST) is intended to reduce the prices of many commodities. Though, some goods are available at cheaper prices, some became very expensive after the implementation of this tax.

The real estate sector is one among them. It is majorly affected by GST. Though the builders have to transfer the amount to the extent of the input tax credit (ITC) to the buyers, most of them are not doing.

Moreover, due to lack of awareness, buyers are also in a chaotic condition. Hence, they feel GST is a burden.

Currently, the GST on under-construction flats is 12 percent after allowing for the cost of land (this is out of GST).

However, buyers need not pay GST on constructed (ready to occupy) properties; they just need to pay the stamp duty.

A group of ministers’ panel met in Delhi yesterday to suggest changes in the GST on flats. Deputy chief minister of Gujarat Nitin Patel led the panel.

It preferred that the GST to be reduced to 5 percent on under construction flats without credit of input tax paid on raw materials.

The panel also favored that the GST on affordable housing be reduced from 8 percent to 3 percent.

But, whether the GST Council would approve it or not is also doubtful.

One of the officials said that the government is working on tax relief measures on residential flats to boost the sector.

He added that after agriculture, real estate is a major sector and approvals would be completed in a couple of days.

Though the move of slashing the GST without ITC is to help homebuyers, experts says it would increase the cost as there is no involvement of ITC.

They are advising the government to provide relief to the end customer i.e. the buyer without breaking the chain of GST credit. Then only, they can get more benefit.

Image by pleccese from Pixabay (Free for commercial use)

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