Key highlights of transition plan for new GST rates:
- It allowed builders of properties under construction up to March 31, 2019, to choose between the old GST rate of 12% with input tax credits (ITC) and the lower rate without ITC announced in the previous meeting.
- For housing projects launched on or after the first of April this year, the developers will have to adhere to the new GST rates recommended by the council last month.
- Developers can also opt for different GST options for separate buildings in a project depending on if construction started before or after 31st March this year.
Recommendations made by the GST Council in its 33rd meeting to boost the residential segment of the real estate sector:
- GST rate:
- GST shall be levied at effective GST rate of 5% without Input Tax Credit (ITC) on residential properties outside affordable segment;
- GST shall be levied at effective GST of 1% without ITC on affordable housing properties.
- Effective date: The new rate shall become applicable from 1st of April, 2019.
- Definition of affordable housing shall be:
- A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).
- Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).
- GST exemption on TDR/ JDA, long term lease (premium), FSI: Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.
