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 a slowdown in the sector and low off-take of under-construction houses which needs to be addressed. To boost the residential segment of the real estate sector, the following recommendations were made by the GST Council in its 33rd meeting held today:
GST rate:
Effective date: The new rate shall become applicable from 1st of April, 2019.
Definition of affordable housing shall be:-
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).
Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).
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 new tax rate in principle was approved by the Council taking into consideration the following advantages:-
GST Council decided that the issue of the 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 the force of law.