New Delhi: Buyers of under-construction residential flats have reason to cheer, as a ministerial panel on Friday recommended lowering the goods and services tax (GST) on such properties to 5 per cent from the prevailing 12 per cent.
The Group of Ministers (GoM) that met on Friday also favoured slashing the GST on affordable housing units to 3 per cent from 8 percent. Officials said the report of the GoM would be finalised within a week and would be placed before the GST Council headed by finance minister Piyush Goel.
“The GoM favoured lowering GST rates on residential houses to 5 per cent without input tax credit and to 3 per cent for those under affordable housing,” an official said.
The panel headed by Gujarat Deputy Chief Minister Nitin Patel was set up last month to analyse tax rates, issues and challenges being faced by the real estate sector under the GST regime.
If these recommendations are finally okayed by the GST Council, real estate sector and individual buyers of flats and houses would reap the benefits in terms of lower tax liability.
Suresh Nandlal Rohira, a partner with advisory firm, Grant Thornton said, “home buyers will get their due benefit under GST with GoM recommending 5 per cent levy without ITC (input tax credit) for under construction property and 3 per cent without ITC for affordable housing.”
“It is a welcome move as in most cases, buyers always felt that the builders were not passing on ITC benefits to consumers under 12 per cent levy and the ultimate burden was to be borne by the consumers. This will really change the sentiment and may bring some boost in the real estate sector,” Rohira added.
Currently, GST is levied at 12 per cent with input tax credit on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale....