input tax credit Current Affairs - 2019
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The GST council has decided to slash the tax rate on under-construction residential properties and the affordable housing projects category.
Decision of GST council
- The GST council has reduced the GST rate for under construction from the present 12 per cent to 5 per cent.
- The GST rate for affordable housing category is now 1 per cent compared to the present 8 per cent.
- The new rates will be applicable from April 2019.
- For both under construction and affordable housing category the builders would not be able to claim the input tax credit (ITC) which they used to get when the tax slabs of 8 per cent and 12 per cent were applicable.
- To ensure that the benefits of tax reduction are passed on to the consumers the government has created more conditions, especially for the affordable housing category.
- Houses under the affordable housing category.are divided into two categories metro and non-metro.
- In metro areas of Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad), Mumbai, Kolkata, Chennai, Hyderabad and Bangalore, the eligibility for affordable housing would be properties worth Rs 45 lakh and 60 sq metre carpet area and in non-metro cities it would be Rs 45 lakh and 90 sq metre.
- The law committee has been mandated to frame the transition rules for those already in construction.
- The government has created a safety net to ensure that the removal of input tax credit doesn’t drive the sector to the cash-based one, especially in black by mandating the builders selling houses under the normal and affordable category to procure a large percentage of their inputs from GST registered suppliers.
This decision of the GST council is expected to push demand and increase sales of under-construction properties. The new norms may even bring many more properties, even in the premium segment, into the affordable category.