Real estate body CREDAI NCR President, Pankaj Bajaj lauded the move by GST Council to cut the tax rate to 5% for under construction flats.
Real estate body CREDAI NCR President, Pankaj Bajaj lauded the move by GST Council to cut the tax rate to 5% for under construction flats.
Bajaj said, "It is a great relief for both the real estate industry and the home buyer. There is no incentive to postpone the home buying decision anymore. Home buyers were shying away from under construction property due to the high GST. It now makes sense to go ahead and buy a home as the prices are really reasonable. In the affordable category, the loss of input credit will hurt the developers and increase their costs. But 1% GST will not hurt the customer and at least they will not postpone the buying decision."
In a huge relief to middle-class homebuyers, GST Council chaired by the Finance Minister Arun Jaitley on Sunday announced that now the individuals will only have to pay five per cent GST on under-construction flats instead of 12 per cent.
Read: Poll bonanza for home-buyers: Now, pay 5% GST on under-construction flats
In a media briefing, Arun Jaitley further said that the affordable housing will atract one per cent GST. Earlier, it was 8 per cent.
"We've adopted twin definition of affordable housing. One on basis of carpet areaand second on cost. In metros,60 sq m carpet area and Rs45 lakh cost of apartment to fall in affordable housing. However, in non-metros,it'll be 90 sq m carpet and Rs 45 lakh cost", Jaitley said.
The new rates will come into effect from April 1, 2019.
Currently, premium housing attracts 12% GST while an effective rate of 8% is applicable on the affordable housing segment for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale. The GST, however, is not levied on the properties where the completion certificate has been issued.
There have been complaints filed with the National Anti-Profiteering Authority (NAA) that the builders have not been passing the GST benefit of the ITC to the homebuyers.
This is likely to give a boost to the under-construction housing segment which has not been attracting customers as such properties had become costlier as compared to finished ones that didn't attract GST, said experts.
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 "GST cut on housing sales: Huge relief for real estate sector, home-buyers, says CREDAI")
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