Real Estate is the best investment mode in India from ancient times. We can’t deny the fact that this industry is playing a significant role in boosting the GDP and creating employment. Recently, a new set of guidelines were issued from GST council on real estate with reference to Goods and Service Tax. Anuj Goel, Director Goel Ganga Developments, said that this slash down on GST in the residential projects in Pune is expecting to bring huge changes in this industry in the coming future.
The new rates would come into effect from the 1st of April with the two most important changes:
• 5% GST will be charged without ITC on the residential properties which are not part of the affordable housing schemes.
• GST to be charged at 1% without ITC on residential properties that are included in affordable housing.
The council made no changes for selling a completed property or on reselling an old one. As per the official statement the qualifying standards for affordable residential property in India would be -
• The total carpet area can’t exceed 60 sq. meters in a metro city.
• In a non-metro city, the total carpet area cannot exceed from 90 sq meters.
• And the last one, the total cost of the property can’t pass Rs 45 lakh in either a metro or in a town.
The GST council also proposed an option to the builders and developers to choose between the old tax rates and the new ones for the under- construction residential units. This step is considered to resolve the ITC (input tax credit) issues emerged recently.
If the developers are interested to pay the Goods and Service Tax at old rates they can undergo the input tax credit. They have been given the time limit to notify their respective jurisdiction offices till May 10th. In case they fail to inform the said office, it would be considered that they have selected the new rates. The developers who fail to follow the norms will pay a GST at 18%.