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For Real Estate Developers: GST Council Offers Two Tax Policy Options Before 31 March 2019
Representative image. (Flickr/Chandrika Nair)
Goods and Services Tax (GST) Council on Tuesday (19 March) allowed real estate developers to either choose between the old GST rate of 12 per cent with input tax credits (ITC) or the lower rate of five per cent without ITC for under-construction properties.
This choice has to be exercised by the developers only till 31 March (2019) and from the start of new fiscal year (1 April 2019), only the new rate will apply. The Council also allowed developers to either pay one per cent GST without input tax credit (ITC) on the construction of affordable houses or eight per cent with ITC.
According to the Council, affordable houses are those that have a floor space of 60 sqm in metros/90 sqm in non-metros and value upto Rs. 45 lakh.
To boost the slumping real estate sector in India, the Council on 24 February (2019) lowered the tax rate on under-construction residential properties and under-construction affordable houses.
It should be noted that according to a recently released research report, the average size of apartments in most metro cities has fallen in the last five years, driven in part by the millennial preference for smaller flats in prime locations than larger ones in distant suburbs.
According to the report published by real estate consultancy firm Anarock, the average size of properties costing below Rs 40 lakh decreased by as much as 23 per cent over the 2014-2018 period.
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