GST rate on affordable homes comes down to 8%

Starting today, homebuyers under the Credit Linked Subsidy Scheme will also be entitled to concessional goods and services tax (GST) rate of 8% for affordable housing.

Earlier under this scheme, homebuyers were entitled to interest subsidy and a GST rate of 12% was levied.

During the GST Council meeting held last week, it was decided to "extend the concessional rate of GST on houses constructed / acquired under the Credit Linked Subsidy Scheme for economically weaker section (EWS) / lower income group (LIG) / middle income group-1 (MIG-1) / middle income group-2 (MIG-2) under the Housing for All (Urban) Mission and low-cost houses up to a carpet area of 60 square metres per house in a housing project which has been given infrastructure status, as proposed by Ministry of Housing & Urban Affairs, under the same concessional rate."

Thus, the benefits can be availed by any individual whose annual income is up to Rs 18 lakh.

On the other hand, the developers will also benefit from the move as all the raw materials utilised to construct such projects or flats will now attract 8% GST instead of higher rate of 18% or 28%.

After the meeting, the GST Council had announced "that all inputs used in and capital goods deployed for construction of houses attract GST of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting the value of land)."

Under the Credit Linked Subsidy Scheme for Housing for All (Urban) Mission, subsidy would be provided on home loans taken for buying EWS, LIG, MIG-I and MIG-II homes and even for adding rooms to the existing houses.

Commenting on the development, DLF managing director Rajeev Talwar said, "With implementation of effective 8% GST, our demand to reduce the rate on housing has been met partially. What we also want is the same GST rate for homes up to 150 square metres and not just to limit it up to 60 square metres."

EASING NORMS

• Earlier under the Credit Linked Subsidy Scheme, homebuyers were entitled to interest subsidy and a GST rate of 12% was levied
   
• The developers will also benefit as all the raw materials utilised to construct such projects will now attract 8% GST instead of higher rate of 18% or 28%