Good news for the home buyers as GST has been reduced to 1% by the council on 3rd March 2019. The tax rates have been reportedly reduced for affordable houses and under construction apartments. This new law will be amended from the new financial year beginning from 1st April 2019. The GST rate for affordable housing has been fixed to be 1% whereas that of the under construction apartments will be 5%. As of now, the tax amendment demands 12% GST rate on the input tax credit (ITC). This rate is levied on the amount paid for the under construction properties or completed assets where the certificate has not been issued. The existing GST rate for affordable housing is 8%. Imagine how much a homeowner will be able to save after April once the new amendment of the GST Act is enforced.

The ministries will regroup regarding the apartments or assets provided via a lottery system in order to fixate on a particular rate to amend. In this case, the state lotteries ask for 12% GST whereas the state authorized lottery services demand for 28% tax. All these new amendments and proposals were put in front of the press meet in the 33rd Meeting held by the GST Council. Jaitley stated that the consumers were in distress as they found that the ITC proceedings were not aptly beneficial for them. The consumers also thought that the benefits were not actually passed on by the respective builders. This is the reason why a group of ministry was set to reform the GST act in this sector.

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New Definitions For Affordable Housing

The group of ministries will sit again to redefine affordable housing in metro cities and non-metro establishment in India. In this meeting, the group decided to expand the range of affordable housing in Delhi, Chennai, Bangalore, Hyderabad, Kolkata and Mumbai to 60 square meters with a price ranging up to INR 5 Lakh. For the non-metro cities, this range is increased to 90 square meters. The reason behind increasing the length of this range is that the middle and neo-middle class population can easily fulfill their aspiring dreams of owning new affordable houses in the cities.

People will now enjoy the slack in GST margin and can easily afford bigger houses to make their lives better. The valuation will be set very soon in the next meeting so that the real estate sector does not move again to a cash-driven segment. The government is trying to preserve the newly found transparency of this sector perfectly. It also wants the people to find and afford better options in the country and elevate their current status to a new level.

Final Words

Finding a new home in a metro city at an affordable price was a myth until now. Even the real estate projects were witnessing a downfall. Due to the immense price hike and a huge gap between what people can afford and the city offers, the real estate industry is currently under huge stress. To solve the problem, the ministry has taken a benevolent step.