GST council’s decision of making new tax rates optional for under construction residential projects brings a big smile on fence-sitting prospective homebuyers. The decision also acts as a breather for developers over their long-term concern on loss of ITC (Input Tax Credit) in the new regime.
In this decision, GST council gives flexibility to homebuyers to either choose the old regime of GST with 12% ITC or new regime of 5% GST without ITC for general housing. However, this option is available only for those under-construction projects where construction started prior 1st April’2019. For affordable housing, the new tax regime is 12% GST with ITC or 1% GST without ITC. For all those projects, where construction will start after 1st April’2019, 5% GST is charged without ITC for general housing and 1% GST without ITC for affordable housing.
However, the case is little different with super premium units having sq.ft area bigger than 10,000 sq.ft. With the super-premium units, new tax regime would be profitable for buyers. In the affordable segment, there would not be much difference in the total cost of the property even if new tax regime GST is applicable.
Even criteria of properties falling under affordable housing segment are also changed. Any house with carpet of 970 square feet in non-metros and 650 square feet in a metro with the cost upto Rs. 45 Lakh will be categorized as affordable housing.
No wonder, such decision bring a big relief to the real estate sector and even boost housing demands by middle and neo-middle class.