Relief for home buyers: GST Council lowers tax on real estate ahead of polls

February 24: Ahead of the Lok Sabha polls, the Goods and Services Tax (GST) Council on Sunday cleared the proposal for lowering the GST rates for real estate. This move would certainly find favour with middle class voters ahead of elections later this year.

 Finance Minister Arun Jaitley announced that the new rate will be 5 per cent, down from the current 12 per cent, on all housing projects which were not in the affordable housing category. The council also decided to lower the tax rate on affordable housing projects to 1 per cent from 8 per cent. However, in both cases, input tax credit (ITC) cannot be claimed.

Properties costing up to Rs 45 lakh will be considered affordable. Similarly, properties with a carpet area up to 60 sqmt for metros and 90 sqmts for non-metros will be considered affordable. The rate cuts will be effective from April 1.

Sunday’s decision was broadly based on recommendations of a ministerial panel led by Gujarat deputy chief minister Nitin Patel which favoured lowering the GST rate on under-construction properties.