Rationalising GST rates applicable on real estate sector is likely to bring back the boom in housing sector. A decision to this effect was taken by GST Council at its meeting held on Tuesday. As per decision, it will be a win-win situation for buyers and sellers. It will also help in achieving the dream of ‘Housing for All’, one of the centre’s flagship schemes.
The Council has given go-ahead for new rules, which was much awaited by real estate sector though some conditions have been attached to it. The council has slashed tax rates for under-construction flats in affordable housing sector to 1% and on constructed flats to 5%. This will come into effect from April 1, 2019.
Sources said real estate players are happy that government has taken precautions to ensure a smooth and easy transition to new regime of rates and allowed the option to follow existing rates for ongoing projects. The period of wait and watch as regards to GST for the industry and consumers is over, according to observers.
GST Council’s major decisions
1. Under-construction projects as on March 31, 2019, will have an option to choose an old rate with Input Tax Credit (ITC) or new rates without ITC.
2. Up to 15% of commercial spaces to be treated as residential properties for GST purpose.
3. Time limit for transition to new rates to be discussed with states.
4. ITC to be proportionate to area space.
5. 80% material to be procured from registered dealers.
6. Affordable housing to be taxed at 1% without ITC.
The decision by GST Council has cleared the way for reduction of GST on affordable housing to 1% and all other housing to 5% with effect from April 1, 2019. This will help in bringing back the boom in the sector. This will benefit buyers and sellers. Importantly, prices of properties will come down.
CREDAI secretary, Indore