GST Council 33rd Meeting: Benefits to Residential Real Estate Segment
GST since its inception has never failed to woo taxpayers! Today (24th February 2019), Council in its 33rd meeting held today, to boost the residential segment of the real estate sector which has seen a slump since 2015, has given following recommendations to revive the segment:
(A) Reduction in GST rate with effect from 1 April 2019:
- On Residential Properties in Affordable segment: GST will be levied at an effective rate of 1% without claiming Input Tax Credit (ITC) from existing 8%.
- On Residential Properties Outside Affordable segment: GST will be levied at an effective rate of 5% without claiming ITC from existing 12%.
In order to avoid any misintepretation, Council has clearly defined Affordable Housing as a residential house/flat of carpet area of upto 90 sq mts. in non-metro cities/towns and upto 60 sq mts in metro cities with value upto Rs. 45 lacs. Metro Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).
TheTaxTellers' Comment: Though it s a welcome move by the government, however keepng value of projects in metro and non-metro cities similar is not synchronised with the objective. To boost the sale of affordable houses in metro cities the value of house should have been higher.
(B) Exemption on Transfer Development Rights (TDRs)/ Joint Development Agreement (JDAs), Long term lease (premium), Floor Space Index (FSI): Intermediate tax on TDRs, JDA, long term lease premium, FSI shall be exempted only for such residential property on which GST is payable. This would address the cash flow problem of the sector.
Note: Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a special meeting.
(C) Benefits:
- Reduciton in pricing of houses due to non-lapse of credit.
- Tax structure and tax compliance becomes simpler for builders.
(D) Decisions deferred to next Council meetng: GST rate on Lottery tickets
It is to be noted that the above amendment would be given effect through a notifications/ circulars in official Gazette.
Trust the above clarifies and is useful. In case of any clarifications, please raise a query under My Advisories after logging into your Dashboard @ www.taxtellers.com via Real Time Advisory Platform (On Signup, Get 20 queries on us). You may also write to us at info@taxtellers.com
Regards,
TheTaxTellers Team
