The government agreed to lower Goods and Services Tax on under-construction affordable homes under 60 square metres to 8 percent from 12 percent, Rajiv Talwar, chairman of National Real Estate Development Council, told reporters.
Real estate companies have been pitching for a lower rate across the board. In a meeting with finance ministry officials today, they demanded a 6 percent GST on all under-construction homes, Talwar, said. And input tax credit should continue, he said.
Homebuyers pay 12 percent GST in addition to stamp duty and registration levied by states.
If the government reduces GST on homes from 12 percent to 6 percent, a new slab of 6 percent will have to be created, said Abhishek Jain, indirect tax partner at EY India told BloombergQuint. “For the 6 percentage-point reduction, they will have to think through the revenue implication if they wish to go ahead with this change.”
No GST is levied on homes sold in completed projects.
Watch this discussion with Rajan Bandelkar, vice-president at NAREDCO and Abhishek Rastogi, partner at law firm Khaitan.
Also Read: What If Real Estate Is Brought Under GST?
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