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In the 33rd GST council meeting, the Union Finance Minister, Arun Jaitley said-“The GST rates on Under-Construction housing would be 5% without ITC. We have accepted this recommendation of the GOM. At the same time, the GOM recommended that the GST on Affordable Housing should be 3%. However, if we want to encourage the Affordable Housing, the GST rates on such properties would be 1%”.
As we discussed in our earlier blog, the GST council will very soon take a strong decision on the GST rate cut on housing properties, so here we are again with new updates.
GST Council Meeting Updates
The GST council meeting was held yesterday .i.e. on Sunday, 24th February 2019. Finance Minister Arun Jaitley took a final decision on GST rates cut on housing properties.
However, on Wednesday, the GST council meeting was held through video-conference. But non-BJP states disagreed to the decision on the issue because of not being physically present in the meeting.
The decision taken by the Finance Minister and the GOM (Group of Ministers) has provided a big relief to the Real Estate Sector. There has been a tremendous GST rate cut on housing.
“Real estate sector offers employment to quite a large number of people in India and hence, the sector is known as one of the biggest contributors to the national GDP (Gross Domestic Product). The country has a vision of “Housing for All by 2022″. It implies that every Indian citizen would possess a house by 2022, and would be free of slums”, said the GST council in the press note.
Further, Arun Jaitley in his tweet said that-
What are the new GST rates applicable to housing properties?
According to the 33rd GST council meeting, the council made the following recommendations for boosting up the residential segment of the real estate sectors:
- GST, on the under-construction properties, would be 5% without ITC (Input Tax Credit),
- While GST, on the affordable housing properties, would be 1% without ITC.
What is the effective date of the GST rate cut on housing properties?
The decided GST rates on real estate sector would be effective from 1st April 2019.
New definition of Affordable Housing Properties, according to GST council recommendation
A residential flat or house with a carpet area of up to 60 sq.m in metropolitan cities and 90 sq.m in non-metropolitan cities having a value up to Rs. 45 lacs will come under affordable housing property.
Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Faridabad, Gurgaon), Bengaluru, Chennai, Kolkata, Hyderabad, and Mumbai (the whole of MMR) come under Metropolitan cities.
What benefits can people avail as a result of new GST rates on real estate sector?
- It will speed up the construction sector.
- If the buyer receives the completion certificate at the time of sales, then no GST would be applicable on the property.
- Most of the buyers would now be able to have their own house because of the 1% GST rates on affordable housing.
- There won’t be any input tax credit applicable to the purchase of housing properties. Therefore, the interests of both buyers and developers will be protected.
- As a result of the tax exemption, the number of buyers will increase. In turn, there would be sufficient cash flow in the real estate sector.
- Eventually, now, the people will get a better tax structure and adherence to compliances would be easy for the builders.
A review of the decision taken in the last GST council meeting
In the last meeting of GST council, the following decisions were made:
Meeting on GST rate cut postponed to 24th February 2019
On Wednesday, 20th February 2019, the GST council meeting was held through video-conference. But non-BJP states disagreed to the decision on the issue because of not being physically present in the meeting. Therefore, Arun Jaitley announced that the meeting would take place on Sunday .i.e. on 24th February 2019
The deadline for filing GSTR-3B returns extends by two days
After the meeting on Wednesday, the Finance Minister Arun Jaitley announced that the GST council would discuss the real estate issues on Sunday. Further, the Council extends the deadline of filing GSTR-3B returns by two days.
Discussion on lotteries remain unsolved
Apart from this, the Council also had a discussion over the differences on issues of housing and lotteries. According to official resources, the lotteries haven’t yet reached a level where discussions can come to a conclusion.
Deputy CM of Gujarat proposed for 3% and 5% rate cut on housing properties
The GOM, led by the Nitin Patel, the Deputy Chief Minister of Gujarat, recommended for 3% and 5% rate cut on the affordable housing properties. Whereas, Manpreet Badal, Finance Minister of Punjab said that because the land is a subject of state, it must not be included in the GST. However, Sushil Kumar Modi, the Deputy Chief Minister of Bihar, proposed for the least rate of 1% on small business operating in residential areas from a 10% carpet area.
Our take on GST council meeting update
From the above-discussion on current GST council meeting updates, we have encountered that the decision taken by the GST council is quite a strong move and completely in the favour of Real Estate Sector. The sector will avail a huge benefit whether on the GST rate cut on affordable housing or under-construction properties. We expect that the move will help slums to come out. Furthermore, it will let them buy properties at lower rates and live a better life. Housing is one of the basic needs of every citizen. Considering the same, we can say that the Government has taken quite a wise move and that it really cares for its citizen. Rest, we can wait for a year and find out how much increment in the housing properties will be.
For more info on GST council meeting updates, contact Swarit Advisors.