GST rate cut on housing to address needs of home buyers, contribute to job creation: Confederation of Indian Industry

New Delhi: The GST Council’s decision to cut the rate on houses under construction from 12 percent to 5 percent as well from 8 percent to 1 percent on affordable housing will address the needs of home buyers and boost offtake of housing, CII said Sunday.

“The real estate and housing sector drives construction and is a key employment generator and we believe today’s decisions for a better and simpler tax regime will boost offtake of housing, thereby also contributing to job creation,” CII Director General Chandrajit Banerjee said.

He said the GST Council has provided great relief to the sector and is a step towards hastening growth for this very important sector.

In a big relief to home buyers, the GST Council Sunday slashed tax rates on under-construction housing properties to 5 percent without an input tax credit, from the existing 12 percent, finance minister Arun Jaitley said.

The Council also cut GST rates on affordable housing to 1 percent from the current 8 percent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities.

The new tax rates will come into effect from 1 April, 2019.

Currently, the GST is levied at 12 percent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

However, builders will not be able to claim an input tax credit (ITC) under the new GST rates.