New GST Rates That Will Help Homebuyers
The Goods and Services Tax (GST) introduced in 2017 has been hailed as one of the biggest economic reforms in India in the last few decades. GST has had a direct positive impact on the real estate sector, introducing a greater level of simplicity, transparency and efficiency in the transactional processes. However, the recently revised GST rates have been brought about specifically for the benefit of the homebuyer.
Here are some ways in which the revised GST rates will benefit Indian homebuyers and boost investment in real estate:
1. GST concession on ready-to-occupy properties:
The Finance Ministry of the Government of India has recently announced that the existing rate of 12% GST has been slashed to 8% in the case of ready-to-move properties. For properties that are under construction, the rate remains 12%. There has been an upsurge in the investment to ready-to-move real estate projects since this revision.
2. GST concession on purchases under CLSS:
The GST Council has also extended the concessional rate to houses that have been constructed or acquired under the CLSS (Credit-Linked Subsidy Scheme) for the economically weaker section (EWS), the lower-income group, the middle-income group-I (MIG-I) and the middle-income group-II (MIG-II). The concession is also applicable to flats/apartments of up to 60-square metre carpet area. This has greatly benefited homebuyers who are looking to invest in smaller and more affordable accommodation.
3. No GST to be recovered under affordable housing scheme:
The Finance Ministry has also recently issued a directive to real estate developers stating that no GST is to be recovered from homebuyers who are investing in property under the affordable housing scheme. The Ministry has directed the real estate builders to adjust the GST amount against the input credit, both of which are approximately at the rate of 8%.
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