With major reforms in the housing sector by the Union Government, both ready to move-in and affordable residential properties has seen a boom in their sales. Some of the major reforms like lower tax rate and input tax credit are the major factors behind this boost. In the last few months Government has come up with many new announcements which according to experts will definitely help in increasing the sales of affordable and ready to move in properties.
In order to achieve the target of their ambitious project ‘Housing for all by 2022’, the Government has cut the initial announcement of GST on affordable housing from 12% to 8%. The reduced tax is applicable up to 645 sq ft homes purchased through the credit linked subsidy scheme (CLSS) under the Prime Minister Awas Yojana (PMAY), as per changes recommended at the GST Council meeting.
According to a tax expert, “Affordable housing has received encouragement through a reduction in tax rate. Ready-to-move-in properties have also benefited as more homebuyers are showing preference towards buying such apartments to save on GST.”
Talking about Ready to move in properties, experts say that properties with occupation certificate are gaining a lot of momentum as they are out of GST ambit and are therefore tax-exempt. On the other hand if one goes for under-construction properties then they have to pay a GST of 12% with full input tax credit.
Industry experts say that for better results of GST implementation, Government should also incorporate stamp duty on property deals under a new system. “If the stamp duty and registration fees are subsumed under the GST regime, the overall cost of property purchase will come down and hence more and more home buyers will book new homes.” added experts.