GST ON HOUS­ING BOON TO BUY­ERS

The Free Press Journal - - NATION -

Those buy­ing the prop­er­ties like build­ings and flats should re­lax as the Goods and Ser­vices Tax (GST) on hous­ing will lower the cost by 5 to 6%. The Fi­nance Min­istry on Satur­day clar­i­fied that the Goods and Ser­vices Tax (GST) will rather lower the cost of build­ings and flats and the builders are man­dated to pass on the ben­e­fit to the buy­ers by way of re­duced prices/in­stall­ments.

Junk­ing the myth that the hous­ing prices will go up due to GST, a min­istry press note said the ef­fec­tive rate of tax payable by the builders will be 10-12% as against 1518% prior to im­po­si­tion of the GST.

It also gave the cal­cu­la­tions in sup­port. The breakup of the pre-GST tax on hous­ing to­tals up to 15-18%, which in­cludes 4.5% ser­vice tax, VAT 1% to 5% plus 12.5% cen­tral ex­cise on most con­struc­tion ma­te­ri­als, VAT of 12.5 to 14.5% and also the en­try tax.

In the new GST regime, ITC on VAT and cen­tral ex­cise on the in­puts get em­bed­ded in the value of prop­er­ties and con­sid­er­ing that goods con­sti­tute ap­prox­i­mately 45% of value, the em­bed­ded ITC in case of GST is ap­prox­i­mately 10-12%.

More­over, the min­istry said the GST is ap­pli­ca­ble only on sale of un­der-con­struc­tion prop­erty or ready-to-move-in flats where com­ple­tion cer­tifi­cate is not is­sued by the com­pe­tent au­thor­ity.

There is, how­ever, no GST on the sale of build­ings and ready-to-move-in flats were the sale takes place af­ter the is­sue of the com­ple­tion cer­tifi­cate.

Also, hous­ing projects in the af­ford­able sec­tions such as Prad­han Mantri Awas Yo­jana, Jawa­har­lal Nehru Na­tional Ur­ban re­newal Mis­sion, Ra­jiv Awas Yo­jana and the hous­ing schemes of the state gov­ern­ment at­tract only 8% GST. On most cases, the builders will not have to pay GST in cash in these cases since they will have enough In­come Tax Credit (ITC) in their ac­count books to pay the out­put GST.

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