The GST council approved a transition plan for the implementation of new tax structure for the real estate sector with applicable rules for housing units being applicable from April, 2019. The council also decided that under construction projects will have an option to shift to new rate. The GST will levied at effective rate of 5% without ITC on residential properties. A residential house/flat of carpet area of up to 90 square meter in non-metropolitan cities/towns and 60 square meter in metropolitan cities having value up to Rs 45 lack has been categorized as affordable housing.
The council also held that 80% procurement of materials should be from registered dealer. It also announced that up to 15% of commercial space to be treated as residential property for GST purpose. The council also decided that reversal of input tax credit to be done on proportionate basis and the time limit for transition to new rates will be discussed with the states.The pragmatic move to segregate under construction projects from new projects would provide relief to builders who were worried about the loss of input tax credit.
This would also enable them to price the loss of input tax credit in the new projects. Protecting existing input tax credits and mandating the new projects would benefit both builders and consumers. The specific statements on invocation of anti-profiteering provisions of the benefits of lower rates are not pissed to consumers appears to indicate that the government is keen to protect consumers from a GST-led price increase.
courtesy : manoramaonline.com