DNA Money Edit: Clarity emerges for real estate GST

A month after GST Council slashed tax rates for under-construction flats, the move to approve a transition plan for implementing a new tax structure for the real estate will help reduce confusion and avoid operational hassles. The Council has addressed the transition issues on Input Tax Credit (ITC) for the ongoing projects by making it flexible for property developers to choose between the two GST regimes – the old one with ITC option and the reduced rates without ITC.

This means that effective April 1, projects where construction has already started prior to April 1 can choose the normal rate of 12% (with ITC) or 5% (without ITC) and in the case of affordable housing, 8% (with ITC) and 1% (without ITC). Developers can also choose to have old and new GST rates for different buildings in the same project. All new buildings and projects where work begins after April 1 will have to adhere to the new rates.

However, it is to be seen if the new structure will provide any substantial boost to the sagging sales any time soon. As the cut-off date is just two weeks to go, developers will have to immediately swing into action and bring in new IT systems and processes quickly. Thousands of house hunters across India are reportedly waiting for developers to slash rates so that they can strike a good deal.