NEW GST RATE FOR REAL ESTATE SECTOR, APPLICABLE FROM 1st APRIL 2019 - GST NEWS
GST Council has given relief to the real estate sector. From April onwards, the construction projects on which the work has started will be lowered. In the meeting of Finance Minister Arun Jaitley on Tuesday, a decision has been taken to give this relief to the Council meeting. But the decision on Maharashtra government's demand has been deferred so far, in which in Mumbai, up to Rs 70 lakh apartment was requested to be in the category of 'affordable housing'. While the new system will reduce GST rates, tax will not get the benefit of input tax credit. They must choose one of the old or new rates.
Now, there are 5 per GST on affordable housing projects under construction and 1 per GST on other projects. But it has been decided to take a tax credit back up from manufacturing materials like steel, cement and paints. They used to keep the Femans Coder with them, for this reason tax credits have been withdrawn. At present, the builders are paid 8 per cent on affordable housing projects under construction and 12 per GST on other projects. The builders of Residential Projects under construction have given the option to choose between the old tax rate and the new tax rate. This auction was given in the wake of the possibility of harassment by the tax authorities.
Revenue Secretary Ajay Bhushan Pandey said that till the completion of the project by March 31, the builders will be given the opportunity to choose the option once. Either select those old retro or choose the new one, they have to decide them. Some developers were suggesting an increase in the prices of flats. On this he said that it will not be allowed. If there is a complaint of improper price increase then action will be taken by the Anti-Profit Dispatching Body.
In the meeting, the Maharashtra government had urged to make the definition of 'affordable housing' soft in cities like Mumbai and Pune. The Maharashtra government had suggested that apartments up to Rs. 70 lakh in Maharashtra and up to 60 lakhs in Pune, would be kept in the 'Affordable Housing' category. At present, apart from floor area, apartments upto 45 lakhs have been kept in this category. Sources said that the decision on this was not taken due to the implementation of code of conduct for the upcoming Lok Sabha elections.
While GST Council has decided to withdraw the input tax credit benefit, at least 80 per cent of the registered vendors have decided to make the tax mandatory on the purchase. It aims to monitor the transactions in the real estate sector. Real estate sector is a sector where most transactions are in cash. If the case of non-compliance with the rules in the purchase comes out, then they have to pay 18 per cent tax. It has also been clarified that those projects will be considered as residential properties, which have commercial space up to 15%. This has been done to relieve the developers. Developers make facilities such as shops, clubs and restaurants for the resident of apartments.
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