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Don't charge the 8% GST from affordable housing buyers: Govt to builders

Finance Ministry said builders can levy GST on buyers of affordable housing projects only if they reduce the apartment prices after factoring in the credit claimed on inputs

Press Trust of India  |  New Delhi 

Real estate, housing finance, building

The on Wednesday asked not to charge any from home buyers as the effective rate on almost all project is 8 per cent which can be adjusted against the input credit.

It said can levy on buyers of projects only if they reduce the apartment prices after factoring in the credit claimed on inputs.

In its last meeting on January 18, the Council had extended the concessional rate of 12 per cent for construction of houses under the Credit Linked Subsidy Scheme (CLSS) to promote affordable housing, which has been given infrastructure status in 2017-18 Budget.

The effective rate, however, comes down to 8 per cent after deducting one third of the amount charged for the house, flat, towards land cost. This provision has effective from January 25.

"All inputs used in and capital goods deployed for construction of flats, houses, etc attract of 18 per cent or 28 per cent. As against this, most of the housing projects in the affordable segment in the country would now attract of 8 per cent.

"As a result, the builder or developer will not be required to pay on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output ..," a finance ministry statement said.

The ministry said "should not recover any payable on the flats from the buyers".

It further said that can be recovered from buyers only if recalibrate the cost of the flat after factoring in the full ITC available in the regime and reduces the ex-price of flats.

The concessional rate of 12 per cent was already applicable on houses constructed under three components of the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) --- (i) ln-situ redevelopment of existing slums using land as a resource component; (ii) in partnership and (iii) Beneficiary led individual house construction/enhancement.

In the meeting last month, the Council extended this tax benefit to CLSS for Economically Weaker Sections (EWS)/Lower Income Group (LIG)/Middle Income Group-1/Middle Income Group-2 (MlG-2) under the PMAY (Urban) programme.

Under CLSS, the subsidy is being provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIG-II) for acquisition and construction of house.

The ministry said now the buyers under CLSS would be entitled to interest subsidy as well to a lower concessional rate of of 8 per cent.

First Published: Wed, February 07 2018. 22:06 IST
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