Homebuyers Can Avail CLSS Scheme With Reduced GST Rate Of 8%

Homebuyers who make the cut under the Credit Linked Subsidy Scheme (CLSS) will not only be entitled to interest subsidy under the scheme but also the concessional rate of 8 percent that the GST Council decided to extend to the affordable housing sector last week.

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Homebuyers Can Avail CLSS Scheme With Reduced GST Rate Of 8%

Homebuyers who make the cut under the Credit Linked Subsidy Scheme (CLSS) will not only be entitled to interest subsidy under the scheme but also the concessional GST rate of 8 percent that the GST Council decided to extend to the affordable housing sector last week.

Also Read: Default Surge In Affordable Housing Temporary : Post GST & Demonetisation

Council, in its meeting held on January 18, had decided to extend the concessional GST rate on houses constructed/ acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission / Pradhan Mantri Awas Yojana (Urban) and low-cost houses up to a carpet area of 60 square metre per house in a housing project which has been given infrastructure status, as proposed by Ministry of Housing & Urban Affairs, under the same concessional rate.

The benefit of Credit Linked Subsidy Scheme can be availed by Economically Weaker Sections or Low or Middle Income Groups for purchase of houses under any project. The maximum annual income for eligibility of beneficiaries under the scheme is up to Rs 18 Lakh.

Also Read: National Housing Bank Wants Lower Affordable Housing GST

Developers too have reasons to cheer. All inputs used in and capital goods deployed for construction of flats, houses attract GST rate of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting the value of land), the note said.

As a result, the builder or developer will not be required to pay GST on the construction service of flats and other things in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats, a press note by the ministry said.

Also Read: Real Estate GST may lead to Greater Transparency, Regulation: Analyst

Credit Linked Subsidy would also be available for housing loans availed for new construction and for the addition of rooms, kitchen, toilet etc, to existing dwellings as incremental housing.

GST Council had decided to give exemption to leasing of land by government to governmental authority or government entity. Also, any sale/lease/sub-lease of land as a part of the composite sale of flats has also been exempted from GST. Therefore, in effect, the government does not levy GST on supply of land whether by way of sale or lease or sublease to the buyer of flats and in fact, gives a deduction on account of the value of land included in the value of flats and only the value of flat is subjected to GST.

Source Link- http://www.moneycontrol.com/.

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