The government in a notification on Tuesday said GST on composite supply of work contracts for the purpose of affordable housing with a maximum carpet area of 60 sq metre that is approved by a authority shall now on be 12% against the earlier decided 18%.

But as per experts, the move is unlikely to be of benefit to end buyers as the GST levy on buying a finished new home is chargeable @ 12%, which is inclusive of state GST. Also, the move is expected to be non-beneficial for the developers as in the process of constructing affordable homes, developers are taking on the construction work on their own and aren't hiring any contractual workers for the different projects. So, in all the end cost for the developer is likely to remain the same with no changes.

An important point to note here is that on sale of a home by a developer to the end user, a GST rate of 18% applies on 2/3rd value of the property. The net rate shall be 12% for the total price of the house ( The abatement in respect of 1/3rd of the value is offered to adjust for the land price; as it is neither accounted as a goods or a service under the current regime).

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