As the new tax structure for housing units comes to effect, it has many implications, on India’s real estate industry for both builders as well as buyers. The GST Council, on March 19, 2019, approved the plan for the implementation of the new tax structure for housing units. Under the new development, GST rates for under-construction flats and affordable housing has been reduced to five per cent and one per cent, respectively. As per the plan, builders will be allowed to choose between the old tax rates and the new ones for under construction residential projects, to help resolve input tax credit (ITC) issues. The council has also increased the carpet area of flats under affordable housing.

The new structure is gauged to reduce construction costs for builders by bringing taxation to a more moderate level, through input tax credit. GST has eliminated the tax-on-tax system.