The GST Council approved a sharp reduction in the levy on homes under construction and raised the threshold for affordable housingNSE 1.52 % that will make more purchases eligible for concessional tax, offering substantial relief to buyers ahead of the elections.
Starting April 1, homes under construction will be levied 5% GST, against 12%. For affordable homes, GST will drop to 1% from 8%.
Homes up to Rs 45 lakh and with a carpet area of up to 60 sq metres in metros and 90 sq metres in non-metro cities will be counted in the affordable segment, according to the new twin definition cleared by the council, which is expected to give a big boost to lower-income housing. The earlier limit was a uniform carpet area of up to 60 sq metres for a house in an approved affordable housing scheme. There will be no input tax credit for GST paid on materials such as cement and steel for the sector at these lower GST rates.
“In its 33rd meeting, the GST Council has accorded big relief to real estate sector,” FM Arun Jaitley tweeted. “This (rate cut) will give boost to housing for all & fulfill aspirations of neo/middle classes.”
The government said in a statement that “the buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%”.
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