New Delhi, February 24
In a relief to the realty sector and home-buyers, the GST Council on Sunday lowered tax on under-construction properties to 5 per cent from 12 per cent, and affordable housing projects to 1 per cent from 8 per cent. The council also made changes in the definition of “affordable housing”. The new rates will be applicable from April 1.
Finance Minister Arun Jaitley said: “The expanded definition of affordable housing is to encourage aspiring people buy bigger flats. We will have to see how new rates can be passed on to incentivise people to buy under-construction flats. However, developers won’t be able to claim input tax credit (ITC).”
The council also decided that properties costing up to Rs 45 lakh would be considered affordable as well as properties with a carpet area of 90 square metres in metro cities and 60 square metres in non-metro cities. On issues like transfer of development rights, sale or transfer of floor space index (FSI) and joint development rights, Jaitley said it was suggested that these be exempted from GST for the sector’s growth. Though praising the decision, the housing sector and property experts called for caution.
MS Mani, Partner, Deloitte India, said, the real estate sector needed rate reductions to prop up sales. “The reductions announced today could lead to an uptick in demand. With these reductions, the GST on normal under-construction apartments would be a little lower than prior to introduction of GST and affordable housing would be significantly lower than before,” he said.
“Having certain categories that are not eligible for input tax credit is an aberration of the basic principles of a good GST,” Mani added. — IANS
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