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GST On Real Estate: New Tax Transition Plan Approved


The GST (Goods and Service Tax) Council on Tuesday decided that it will let builders choose between two different tax rates on under-construction projects by allowing them to shift to new rates. In the meeting that took over video conferencing, a transition plan for the new tax structure was approved. The new tax structure will be applicable from 1 April 2019.


GST On Real Estate: New Tax Transition Plan Approved

The GST Council in its meeting held on 24 February 2019, had come up with new lower tax rates for under-construction housing units. The builders will now be able to choose between the effective rates of 12 percent with input tax credit (ITC) benefit and 5 percent on those without ITC on these units. As for those that come in the affordable housing segment, the choice would be between 8 percent with ITC and 1 percent without it.

Affordable housing for GST means a residential house with a carpet area of up 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities with a value of up to Rs 45 lakh (in any city). Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata, and Mumbai (the whole of MMR) are considered metropolitan cities.

Further, the Council decided that 80 percent of the procurement of materials has to be from a registered dealer.

Additionally, in case of commercial space, 15 percent of it should be treated as residential property for GST purposes.

As for reversal of input tax credit, it was decided to be done in proportionate basis and the time limit to make the transition to the new rates will be discussed with the states.

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