National Housing Bank Wants Lower Affordable Housing GST Rate
Affordable Housing GST Rate: Housing finance companies’ regulator National Housing Bank is in talks with the authorities to lower the effective Goods & Services Tax (GST) rate from current 12% after factoring the lowering of land prices that could ease the tax burden and help in prop up residential sales.
The regulator is likely to push for lower affordable housing GST rate category especially although the general category is also under consideration at an effective rate of 6%. It is said to have written to finance ministry on the issue.
Realtors have also recently met finance and housing ministry officials to suggest a similar change in the current Goods & Services Tax rate. At present, under-construction properties attract 18% GST and allow abatement of one-third of the apartment value towards land cost taking the effective tax rate to 12%.
While several stakeholders have been requesting for lower GST rate for under-construction properties, National Housing Bank is of view that at least affordable housing GST rate need to be given the benefit of lower rates.
Realty developers said the reduction in GST would help in incentivizing end users to buy under construction properties. Most homebuyers are now giving preference to ready-to-move-in apartments to duck the tax.
Industry experts say the gap between tax rates for a ready property and an under-construction property has led to drop in demand for the latter. The GST rate for under construction properties is 12% while ready properties with completion certificate or occupation certificate do not attract GST.
Source Link- https://economictimes.indiatimes.com/news/economy/policy/nhb-pitches-for-lowering-gst-rate-for-low-cost-and-affordable-housing/articleshow/61938846.cms