In a major relief to home buyers, the GST Council on Sunday slashed tax rates on under-construction housing properties from the current 12 percent to 5 percent, albeit without the provision for input tax credit.
The council, headed by finance minister Arun Jaitley, also cut Goods and Services Tax (GST) rates on affordable housing to 1 percent from the current 8 percent.
It even expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq.metres in metros and 90 sq.metres in non-metro cities.
The new tax rates will come into effect from April 1, 2019.
At present, GST is not levied on real estate properties for which completion certificate has been issued at the time of sale.
However, payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale attract 12 percent GST, with provision for builders to claim input tax credit (ITC).
The decision to cut the GST rate from 12 to 5 percent will give boost to the construction sector, Jaitley announced following the council meeting yesterday.
Reacting to the development, PD Sundar, Business Head, QuikrRealty, said the move is a win-win scenario for both builders and home buyers.
“The real estate sector has gone through a relatively tough period over the last couple of years. This move will give a major boost to affordable housing and also make it attractive for investors to once again consider under construction properties,” he said.
“End users will also be free to choose between ready to move in and under construction projects basis their exact needs without worrying about the GST component to a large extent,” he added.
The GST Council will meet again to deliberate and announce the tax slab for state-run and state-authorised lotteries, which currently attract a GST of 12 and 28 percent respectively.Back to latest news