On Friday, the ministerial panel constituted to decide GST on the real estate sector indicated that it would propose taxation of under-construction residential properties at 5% instead of the 12% being charged at present.
In respect of the affordable housing segment, Gujarat Deputy Chief Minister Nitin Patel-headed Group of Ministers propose levying 3% GST as against 8% currently. Nonetheless, as per the one of the official, claiming input tax credit (ITC) will no longer be possible in case of such transactions.
Last month the government formed a seven member GoM panel to oversee GST related issue of the real estate sector. The main agenda of the ministerial panel was to analyse the GST tax rate on under-construction residential properties and thus provide a boost to the real estate sector.
The panel of ministers is likely to finalize its report in probably a week's time and present it in the next GST Council meet for final approval.
Currently, GST taxation on premium housing is at 12% while in case of affordable housing it is 8% for payments made in respect of under-construction properties where at the time of sale of the property, completion certificate is not issued. And in case the property is purchased after the completion certificate has been issued, no GST is levied.