In relief for home buyers, Union Finance Minister Arun Jaitley announced reduction in Goods and Services Tax (GST) for affordable housing to 1 percent, from the previous 8 percent, in the 33rd GST Council meet on Sunday, 24 February.
Residential property priced at Rs 45 lakh or below will now fall under the category of ‘affordable’ and will be taxed at 1 percent, the GST Council announced.
The criteria for affordable housing in Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata and Mumbai MMR region, the finance minister said, will have carpet area of up to 60 square metres and will be priced up to Rs 45 lakh. As for non-metro cities, the criteria will be defined based on carpet area of up to 90 square metres and cost up to Rs 45 lakh.
“The Council has expanded the definition of affordable housing so that aspiring people can buy better houses,” Bloomberg Quint quoted Jaitley as saying.
The council has also slashed tax on under-construction residential houses to 5 percent from 12 percent, Jaitley said.
The new tax rates will be implemented from 1 April 2019.
A Boost To The Real Estate Sector
The move has been taken to boost the residential segment of the real estate sector, a statement released by the Finance Ministry stated.
“Real estate sector is one of the largest contributors to the national GDP and provides employment opportunity to large numbers of people. ‘Housing for All by 2022’ envisions that every citizen would have a house and the urban areas would be free of slums. There are reports of slowdown in the sector and low off-take of under-construction houses which needs to be addressed,” the statement read.
The council has also announced that the intermediate tax on development right, such as TDR, JDA, lease (premium) and FSI will be exempted only for such residential property on which GST is payable, the statement said.
The issue of tax rate on lottery needs further discussion in the Group of Ministers (GoM) constituted, the council said.
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