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Recommendations of the 33rd GST Council meeting on Real estate sector

Recommendations of the 33rd GST Council meeting on Real estate sector

In the recent GST council 33rd meeting which was held on 24th Feb 2019 took some important decisions based on the inputs given by many of the industry experts and GoM.

The GST council slashed the GST rate on under construction houses form 12 percent to 5 percent for the better. The GST rate cut has been done in the wake of builders input of taxes in the overall construction of the house. The said provision and changes will be going to implement from 1 April 2019 (FY 2019-2020).

However, the GST council also withdrew the benefits of the input tax credit from both the under construction properties as well as from the affordable housing scheme where the rate cut has made to a low level of 1 percent.

On the other hand, the Pradhan Mantri Jan Awas Yojana also saw some price cut i.e from 8 percent to 1 percent
making the affordable housing more convenient for the common people however taking back the input tax credit.

Note that the carpet area of a house in the metro city up to 60 square meters (around 650 square feet) and in the non-metro i.e. 90 square meters (970 square feet) is accounted in the affordable housing scheme. Also, the conditions under the reduced GST rate implies that the property value must be under 45 lakh for the 1 percent GST rate while the value more than 45 lakh would attract the 5 percent GST rate.

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