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A Boost to “Housing for All” - 33rd GST Council Meeting Highlights

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The 33rd GST Council Meeting was held on 24th February 2019 under the Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley in New Delhi. The council meeting concluded with good news for the Real Estate sector of the Indian Economy. Following are the highlights from the meeting:

  • The residential property with 90 sq. meters carpet area in metro cities and 60 sq. meters in non-metro cities priced at Rs. 45 lakh or below considered ‘affordable’ and taxed at 1 percent.
  • Under-construction properties priced over Rs. 45 lakh to be taxed at 5 percent.
  • Input tax credit not allowed in both the cases.
  • The move will come into effect from April 1, 2019.
  • Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai MMR region are considered as metro cities.

Shri Arun Jaitley Tweeted, “This will give boost to housing for all & fulfill aspirations of Neo/Middle classes.”

Recommendations

The GST council has decided upon the following recommendations effective 1st April, 2019:

  1. Definition of affordable housing

A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).

  1. Effective GST rate
    1. For residential properties outside the affordable segment, GST shall be levied at an effective GST rate of 5% without ITC;
    2. For affordable housing properties, GST shall be levied at effective GST of 1% without ITC.
  2. GST exemption on TDR/ JDA, long term lease (premium), FSI

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.

Advantages of the recommendations made

The following advantages have been taken into consideration by the Council while approving the new tax rate in principle:-

  1. The buyer of the house gets a fair price and affordable housing gets very attractive with GST @ 1%.
  2. The interest of the buyer/consumer is protected; ITC benefits not being passed to them shall become a non-issue.
  3. Cash flow problem for the sector is addressed by the exemption of GST on development rights, long-term lease (premium), FSI etc.
  4. Unutilized ITC, which used to become cost at the end of the project is removed and should lead to better pricing.
  5. Tax structure and tax compliance becomes simpler for builders.

Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose. Furthermore, GST Council decided that the issue of the tax rate on lottery needs further discussion in the GoM constituted in this regard.

You may read about the previous (32nd ) GST Council Meeting here

IRIS Business is a leading GST Suvidha Provider (GSP) providing an easy and efficient solution for GST (IRIS Sapphire) and E-way bill (IRIS Topaz) compliance. To have your GST queries solved and to know more about our solution, please contact us at support@irisgst.com

About Manoj Jain

Manoj Jain, a CA and CS, has been working with IRIS for over 8 years and is currently one of the key subject matter experts for IRIS’ GST compliance offerings. He also has been guiding the clients for GST law related matters. Before GST he was handling US compliance analyzing US financial statements and reviewing XBRL filings for US and India market. He enjoys listening to music and traveling.

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