In a recent meeting, the Group of Ministers [GoM] backed lowering of Goods and Services Tax [GST] for both under construction properties and on affordable housing. The Group of Ministers is a panel of State ministers headed by Nitin Patel, Gujarat’s deputy Chief Minister.
The ministers supported a cut down of GST on under-construction properties from current 12% to 5%.
The GoM was formed last month and finance ministers of seven states including Maharashtra’s Sudhir Mungantiwar, Karnataka Krishna Byre Gowda, Kerala Thomas Isaac, Punjab Manpreet Singh Badal, Uttar Pradesh Rajesh Agarwal and Goa Panchayat Minister Mauvin Godinho are members of this panel.
The GoM is formed to analyze tax rates and resolve various issues faced the real estate sector under the Goods and Services Tax (GST) regime.
In the meeting, the Group of ministers also favored lowering GST [Goods and Service tax] on affordable housing by 3 percent. At present, the GST on affordable housing is 8 percent.
According to the officials, the Group of Ministers will finalize these decisions as they have to table the same before the GST council in the next meeting. The official also said that the Group of Ministers also supported lowering of GST rates on the residential properties to 5 percent without input tax credit and to 3 percent for those under affordable housing.
At present, 12% GST is imposed on the under-construction properties along with Input tax credit (ITC) on the payments that are paid for the under-construction property or ready-to-move-in properties in case the completion certificate is not issued for them at the time of sale. The pre-GST tax effective on these properties was 15-18 percent.
The Goods and Services tax is not applicable on the homebuyers of the properties that have been issued completion certificate at the time of sale.
In January, the GST Council headed by the Union Finance Minister and State ministers decided to form the Group of Ministers to pave ways to boost the housing sector under GST.