Relief for home buyers as GST Council announces rate cut for real estatehttps://indianexpress.com/article/india/relief-for-home-buyers-as-gst-council-announces-rate-cut-for-real-estate-5598913/

Relief for home buyers as GST Council announces rate cut for real estate

The Goods and Services Tax (GST) Council Sunday lowered the tax rate for under-construction housing to five per cent (without input tax credit) from the present effective rate of 12 per cent (after one-third abatement of land).

Union Finance Minister Arun Jaitley chaired the GST Council meeting on Sunday. (Twitter/@arunjaitley)
Union Finance Minister Arun Jaitley chaired the GST Council meeting on Sunday. (Twitter/@arunjaitley)

The 33rd reconvened meeting of the Goods and Services Tax (GST) Council on Sunday lowered the tax rate for under-construction housing to five per cent (without input tax credit) from the present effective rate of 12 per cent (after one-third abatement of land). For affordable housing, the GST rate was reduced to one per cent from eight per cent.

Addressing the media, Union Finance Minister Arun Jaitley said, “We have adopted twin definition of affordable housing. One, on the basis of carpet area and another, on the basis of cost. In metro cities, a 60 sq metre carpet area and Rs 45 lakh apartment will fall under affordable housing. In non-metro areas, it will be 90 sq metre carpet area and Rs 45 lakh apartment. This will come into effect from April 1.”

Explained: What GST rate cut for real estate mean for home buyers

Taking to Twitter, Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi said the GST rate for affordable housing was “reduced from 8% to 1%” & for non-affordable from 12% to 5% without ITC”. “Definition of affordable changed to 90 sq metre and 60 sq metre for non-metro and metro with a capping of Rs 45 lakh for both,” he said.

Currently, the GST is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats and in cases where completion certificate is not issued at the time of sale. Tax, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.

The council meeting via video conferencing proved to be inconclusive on Wednesday and was adjourned for today after a few states demanded a detailed discussion in the form of a physical meeting. Some states had then cited possible revenue loss, valuation of land and sourcing norms for real estate developers as a few issues in lowering the GST rate on residential housing.