GST Rate On Affordable Housing Properties

In Growth of GDP of Nation real estate sector contribution is much higher. This sector provides employment and generates business. In GST Council meeting of 21 Feb 2019 recombination is made for reducing GST Rates on housing properties. The reduced GST Rates will give rise to real estate sector. For affordable housing proposed GST rate is 1% without GST Credit.

Meaning of Affordable Housing

A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities). Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

1. Cartert Area uptp 90 SQM ( 968.75194 Square Feet ) For non-metropolitan cities/towns
2. Cartert Area uptp 60 SQM ( 645.83463 Square Feet ) For metropolitan
3. Value upto Rs.45 Lac

GST Rate on Affordable housing Properties

For giving relief to buyers of housing propertied GST Rate will be revised. For affordable housing proposed GST Rate is 1 % and  in which builder will be eligible to claim GST Credit. And For houses other than affordable housing GST Rate will be 5 % without GST ITC Credit.

• GST rate of 5% without ITC on residential properties outside affordable segment
• GST Rate of 1% without ITC on affordable housing properties.

GST exemption on TDR/ JDA, long term lease (premium), FSI:

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.

Benefits of Reduced GST On Affordable housing Properties.

1. The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.
2. Interest of the buyer/consumer gets protected; ITC benefits not being passed to them shall become a non-issue.
3. Cash flow problem for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.
4. Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing. v. Tax structure and tax compliance becomes simpler for builders.