Gst On Residential House Reduced To 5% From 12%

Are you planning to buy new flat from builder? then wait for few days more , if other thing remain same then you will have definite benefit of buying the same from 01.04.2019 as the GST council has reduced the GST rate on affordable as well non affordable house by a great margin.

If your house cost is One crore then you will have a benefit of Rs 7 lakh only due to reduction is GST rate , so wait for 01.04.2019.

Read Recommendations of the 33rd GST Council meeting on GST rate on under construction houses.

To improve the residential segment of the real estate sector, following recommendations were made by the GST Council in its 33rd meeting held today:

• GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment;
• GST shall be levied at effective GST of 1% without ITC on affordable housing properties.

Effective date: The new rate shall become applicable from 1st of April, 2019.

Benefits behind the recommendations :

The new tax rate in principle was approved by the Council taking into consideration the following advantages:-

• The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.
• Interest of the buyer/consumer gets protected; 
• ITC benefits not being passed to them shall become a non-issue.
• Cash flow kasus for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.

Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing.

Tax structure and tax compliance becomes simpler for builders.

GST Council decided that the issue of tax rate on lottery needs further discussion in the GoM constituted in this regard.

The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.