Indian Tax Solution
NEW DELHI: The slashing of GST rates on under construction flats and affordable housing has come as a relief to home buyers, said finance minister Arun Jaitley on Sunday.
"The GST Council has accorded big relief to the real estate sector..This will give boost to housing for all and fulfil aspirations of neo-middle class and the middle class," Jaitley said after the decisions were cleared by the council.
Come April 1, a house with a carpet area of 60 square metres (around 650 square feet) in a metro city and 90 square metres (970 square feet) in non-metros will be put in the affordable category if it costs up to Rs 45 lakh.
Houses which receive construction certificate do not face GST and home buyers not face GST and home buyers for registration. The GST Council's decision will benefit buyers who are currently on construction-linked payment schemes but not those who have already made 95% down payment.
Tax consultants warned that there may be some price hike in the coming weeks as builders would like to cushion the blow of withdrawal of input tax credit. "As expected, the GST Council has cleared what looks like a 'quick fix' solution to the perception that the industry was not passing on the benefit of input tax credit to customers, just like restaurants. It's good that April 1, 2019 has been agreed to be the date when the new rates become effective, which gives some time to industry to assess the impact and work out the new prices. Developers would need to increase the base price to recover the loss of input credit but would need to be cautious given the surge in anti-profiteering investigations for restaurants, in similar circumstances," said Pratik Jain, partner and leader for indirect tax practice at consulting firm PwC.
On March 10, GST council will decide if a small portion of commercial space in residential complexes which are used for shops will also get the tax benefit. Inaddition, it will consider if lease premium, FSI transfer and some of the other charges will face GST or not.
A decision on GST on lottery was deffered by the council as a ministerial panel with hear the arguments of Kerala and Punjab before taking a final decision.
Huge relief for manufacturers -No GST payments on advances received for supplying goods
On Wednesday, the Central Government spared businesses from paying GST on advance amounts they have received for goods which are to be supplied later in the future. The step was aimed to help clear the confusion over tax liabiliti ...