New Delhi (IANS) The GST Council on Sunday lowered the tax on under-construction residential properties to 5 per cent from 12 per cent to boost the realty sector. The new rates will be implemented from April 1.
The council also reduced goods and services tax (GST) on affordable housing projects from 8 per cent to 1 per cent without input tax credit. It also modified the definition of affordable housing, both in terms of size and cost.
"For affordable housing, GST rate reduced from 8% to 1% and for non-affordable from 22% to 5% without ITC. Definition of affordable changed to 90 and 60 sq mtr for non-metro and metro with a cap of Rs 45 Lakh for both," Bihar Deputy Chief Minister Sushil Kumar Modi said in a tweet.
In metros houses with a carpet area up to 60 square metres, and in non-metros houses with a carpet area of up to 90 square metres will be classified as affordable housing. Properties worth Rs 45 lakh will be also be classified as affordable.
The council, comprising the central and state Finance Ministers, said the new rate on all housing projects, which were not in the affordable housing category, will be 5 per cent, down from 12 per cent, Union Finance Minister Arun Jaitley said.
There are around 6 lakh unsold under-construction house in the top seven cities. The move is expected to boost their sale.
"This will boost real estate, and give relief to middle class," Jaitley said.
The meeting did not take any decision on lotteries as some states were absent. Maharashtra Finance Minister Sudhir Mungatiwar has recommended a uniform rate of 18 per cent or 28 per cent on lotteries.
Due to divergence of views, the proposal on fixing GST rates on lotteries has been referred back to the group of ministers (GoM).