The GST Council is probably going to consider bringing down GST on under-construction flats and houses to 5 percent in its meeting one month from now, an authority said.
At present, the Goods and Services Tax (GST) is required at 12 percent on installments made for under-construction property or ready-to-move-in apartments where completion endorsement has not been issued at the time of sale. Be that as it may, GST isn’t exacted on purchasers of land properties for which completion certificate has been issued at the time of sale.
This 12 percent GST rate ideally would are partly offset by means of taxes paid on inputs by builders and thus the particular incidence of GST on under-construction home consumers would are around 5-6 per cent. An authority said that presently builders are paying for the inputs for construction in money and don’t seem to be passing on advantages to buyers and thus, there’s a need to bring them to the formal channel.
Major construction material, capital product and input services used for construction of flats and homes attract 18 per cent GST, whereas cement attracts 28 per cent tax.
Prior to GST rollout, under-construction housing comes attracted 4.5 per cent service tax and a worth more tax (VAT) of 1-5 per cent betting on the state. Additionally inputs employed in construction attracted 12.5 per cent excise duty additionally to 12.5-14.5 per cent VAT. Besides, entry tax was additionally levied on the inputs. After adjusting for credits on inputs used, the effective per-GST tax incidence on such housing property was 15-18 per cent.
However, if the GST slab for real estate is finalised above 12 per cent, then, home buyers and developers may take a hit, at a time when property prices are already unaffordable in many places.