New Delhi: In what could bring cheers to lakhs of home buyers, the Group of Ministers (GoM) may recommend 5 percent Goods and Services Tax (GST) for under construction properties and 3 percent GST for affordable housing sector, sources told Zee Media.
As per sources, the GST on said category of housing will be imposed without Input Tax Credit. The GoM discussed several issues related to home buyers in its first meeting in Gujarat.
The GOM, headed by Gujarat Deputy CM Nitinbhai Patel, is expected to give its recommendations to the GST Council in two days, sources told Zee Media.
Currently, the GST is levied at 12 percent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
However, GST is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.
Before GST came into force, under-construction housing projects attracted 4.5 percent service tax and a value added tax of 1-5 percent. The rates were separate in each states though.
Inputs used in construction attracted 12.5 percent excise duty in addition to 12.5-14.5 percent Value-Added Tax. Besides, entry tax was also levied on the inputs. After adjusting for credits on inputs used, the effective pre-GST tax incidence on such housing property was 15-18 percent.
With PTI Inputs