Cheer up home buyers..! GST Council seeks to implement lower GST rates citing affordable houses..!

New Delhi, March 19: Discussing the operational details for implementation lower effective GST rate of 1% in case of affordable houses and 5% on construction of houses other than affordable house, the 34th GST council analysed the options in respect of the underway projects in the national capital today.

 

The new tax rates of 1% without input tax credit (ITC) on construction of affordable houses, the statement said, shall be applicable to new projects or on the underway projects which have exercised the option to pay tax in the new regime. The affordable houses for the regulation as decided by GSTC mean area of 60 sqm in non-metros or 90 sqm in metros and value upto Rs. 45 lakhs.

The meeting likely deliberated only the transition provision and related issues for the implementation of lower GST rates for the real estate sector adding, no issues related to rate is in the agenda as the model code of conduct is in force.

The council gave its nod on new rules on how far builders can make use of credit for taxes paid on raw materials and services in settling their final tax liability as the real estate sector moves to a new tax regime from 1st of April.

Currently, the goods and services tax (GST) is levied at 12 per cent with an input tax credit (ITC) on payments made for under-construction property or ready to move in flats where completion certificate is not issued at the time of sale. For affordable housing units, the existing tax rate is 8 per cent.

The new rules meanwhile specify under what circumstances sale transactions initiated in the current tax regime but concluded after 1st of April, will be eligible for Input Tax Credit on taxes paid on raw materials and services.