Impact of 7% GST rate slash on under construction & affordable houses
The Finance Minister of India, Mr Arun Jaitely informed in 33rd GST Council meeting that there will be a 7% slash in the rate of both under construction houses and affordable housing W.E.F. 1st April 2019.
Currently, the GST rate on under construction houses is 12% and the affordable housing scheme is 8% which will be reduced to 5% and 1% respectively.
Affordable housing definition as per GST Council
Non Metro Cities
60 Square Meter
90 Square Meter
45 Lakhs INR
- ITC shall not be allowed on labour cost and input raw material.
- Property on which GST is payable will be exempted from tax Intermediate Tax such as TDR, Premium on the lease, FSI, JDR.
Impact on the Real estate sector
Here is the impact of GST rate slash on the real estate sector:
- Tax compliance will become simpler
- Unutilized ITC will be removed which is currently becoming the part of the cost
- Increase in the sale of property due to a reduction in the GST rate. Hence, sorting out the cash flow crunches
- More employment opportunities as the builder will invest more on the real estate
Impact on the end consumer
Here is some of the important impact on the end consumer:
- The cheaper rate of flats due to a 7% reduction in the GST rate
- Issues relating to the transfer of ITC benefit will get resolved
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