GST Council has announced reduction of charges on under-construction housing to 5% from an effective 12%, providing relief to homebuyers ahead of national polls due by May.
The GST rate on affordable housing projects too has been lowered from an effective 8% to 1%. The new rates will be effective from 1 April. Under-construction properties priced up to Rs. 45 lakh would qualify as affordable housing projects for the purpose of GST relief in metro cities as well as non-metro cities, finance minister Arun Jaitley told.
“We wanted to give a boost to the real estate sector, as well as relief to the middle class, neo-middle class and the aspirational middle class,” said Jaitley.
Although the cap on price of the property is Rs. 45 lakh for both metro and non-metro projects to get the 1% tax rate, they have to meet different carpet area requirements. Only those with a carpet area of 60 sq. m in metros and 90 sq. m in non-metros falling under the Rs. 45 lakh cap would be eligible for the 1% rate, explained Jaitley.