GoM recommendation on GST on housing – Anuj Puri

9 FEB 2019, PUNE – With most cities starting to show green shoots of growth in 2018, the momentum is further needed to be accelerated in 2019. And, what better than a rate cut in GST on under construction properties to flat 5% for residential properties and 3% for affordable housing. As is, fearing delays or stalled projects and an added cost, homebuyers have been preferring to opt for ready properties that are exempt from GST.

Now, after the twin bonanza for real estate sector in the recent budget and the slashing repo rates by the RBI, a flat 5% GST on under construction homes (without the ITC) will provide an indubitable benefit to several home buyers. However, the flat GST rate for affordable segment also needs to be brought down to 3%, else it could bring a major setback to this segment because if the 5% GST rates are fixed for all segments then it could increase the prices of the budgeted homes.