Latest News on GST on Real Estate - GST Rate on Real Estate 2019
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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.

With this favourable implication real estate transactions are hoped to become smoother. With the implementation of the new tax structure, the definition of affordable housing has been expanded. Buyers can now look forward to owning bigger residences at affordable prices. Also, GST is also not levied on buyers of properties for which the completion certificate has been issued at the time of sale. This is welcome call for buyers looking forward to owning an under construction residence. According to Niranjan Hiranandani, president of NAREDCO, bringing real estate under GST’s realm will benefit the consumers who will only have to pay one final tax on the whole product.
Report published on 20.03.2019 in Economic Times, Business Line and Hindustan Times