To give a big push to the Indian real estate market, the GST Council on 24th of January cut down the rates on under-construction properties from 12% to 5%. The GST Council has also brought down the GST rate on affordable houses to 1%. Earlier, the GST on affordable houses were getting charged at 8%. The revised GST rate on real estate will be effective from April 1.
Under-construction properties that are priced less than or equal to ₹45 lakhs will be considered as affordable houses. The GST relief is applicable to both metro and non-metro cities.
Addressing reporters, Finance Minister Arun Jaitley said that we wanted to boost the Indian real estate sector as well as provide relief to the middle class, neo-middle class and the aspirational middle class of the country.
However, in order to meet the benefit of 1% GST rate on affordable houses of value less than ₹45 lakhs in both metro and metro cities, there are different criteria. Houses having the carpet area of 90 square metres in non-metros and 60 square metres in metros that are under the ₹45 lakh cap will get the benefit of 1% GST rate.
Earlier, a videoconference was planned to hold the GST Council’s meeting on Wednesday but it was then adjourned as many Indian states suggested to have a face-to-face meeting on Sunday to discuss the issue on GST rate on real estate thoroughly.
The recommendation came from a ministerial panel which was led by Gujarat Deputy Chief Minister Nitin Patel who was in much favour to lower the GST rates on under-construction projects.
Despite the fact that lowering of GST on real estate will affect the exchequer, the GST Council has been reducing the tax rate to provide relief to homebuyers.
Some of the most reputed builder federations and councils of the countries, such as the Confederation of Real Estate Developers’ Association of India (CREDAI) and the National Real Estate Development Council were demanding a reduction of GST on real estate from a long while.