Your dream house may become cheaper in coming months as GST Council is considering cutting tax on under construction houses. The council is mulling over lowering GST on under-construction flats and houses to 5%, reported PTI. It may be noted that currently under-construction property or ready-to-move-in houses attract 12% tax.
It is to be noted that this GST is not levied on buyers of those real estate properties for which the completion certificate has been issued at the time of sale. The agency report cited an official saying that this 12% tax would have been offest partially, with taxes paid by the builders, ideally. The tax burden on under-construction home buyers in that situation would have been about 5% to 6%.
The report further quoted the official saying, “One of the proposals before the Council is to lower the GST rate to 5% for builders who purchase 80% of inputs from registered dealers”. It will be an important decision as right now, builders are not passing the input tax credit (ITC) benefit to the consumers.
Worth mentioning here is that that GST council in its 31st meeting on Saturday decided to bring down GST rate on six items from 28% to lower slab. 33 items in the 18% slab have been brought down to 12% and 5%. The new rates will be effective from January 1, 2019. The council will discuss taxation of residential property in the real estate sector in the next meeting scheduled in January. A decision on disaster cess will also be taken in the next meet.