Sale Of Affordable Housing, Ready To Move Homes Raised
Sales of Affordable Houses have increased from last one year. There are Two big reasons behind this. First Input Tax Credits, Second Low Tax Rate. Due to being out of realm of GST, demand for Ready-to-occupy properties is also increasing. In the beginning on One-Third Exemption in the value of land, the effective rate of GST was 12%. However, it's stated objective of 'Housing For All' by 2022, rate for Affordable Housing was reduced to 8% . These rates are already effective from January 25.
The rates of reduced tax are applicable only on 645 sq ft. of houses. It will benefit only to those home buyers who have purchased houses through the credit linked subsidy scheme under the Pradhan Mantri Aawaz Yojna. As per changes recommended at the GST Council meeting.
Head - Indirect Taxes (KPMG), Sachin Menon State "Affordable Housing has received Attention through reduction in Tax rate. Ready-to-move-in properties have also benefited as more home-buyers are showing interest towards such type of apartments to save on GST "
Ready properties with Occupation Certificates 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. Luxury residential property market has spot a ordinary pressure due to uncommitted Input Tax Credit.
(This article was originally published in Economic Times)