Low-Cost Houses & Ready To Move In Houses Sales Are Up
Affordable housing has received a boost over the past year, on account of the benefits of lower tax rate and input tax credit. Being out of GST ambit, demand for ready-to-move-in properties is also growing. The initial announcement of effective GST at 12% after factoring in one-third abatement for land value. However, in tandem with its stated objective of ‘Housing for All’ by 2022, the rate for affordable housing was cut to 8% with effect from January 25.
The reduced tax is applicable to up to 645 sq ft homes purchased through the Credit-Linked Subsidy Scheme (CLSS) under the Prime Minister Awas Yojana (PMAY), as per changes recommended at the GST Council meeting.
Affordable housing has received encouragement through the reduction in tax rate. Ready-to-move-in properties have also benefited as more homebuyers are showing preference towards buying such apartments to save on GST, said head-indirect taxes, KPMG.
Ready properties with occupation certificates (OC) are out of GST ambit and are therefore tax-exempt. On the other hand, under-construction properties attract 12% GST with full input tax credit. The luxury residential property market has witnessed a moderate pressure due to unabsorbed input tax credit.
For better results of GST implementation, industry experts continue to demand stamp duty, which is a state levy, on property deals be subsumed under the new regime.
Although it was anticipated GST would reduce property prices pan-India, we have not seen such a significant impact on the ground, said Chairman, Anarock Property Consultants. If the stamp duty and registration fees are subsumed under the GST regime, we would definitely see the overall cost of property purchase come down, he said.
Source Link- https://economictimes.indiatimes.com/