[ecis2016.org] The finance ministry has asked builders not to recover GST from home buyers, who avail of the Credit-Linked Subsidy Scheme and instead, adjust the effective rate of GST against the input tax credits
The government, on February 7, 2018, asked builders not to charge any Goods and Services Tax (GST) from home buyers, as the effective GST rate on almost all affordable housing projects is eight per cent, which can be adjusted against the input credit. It 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.
You are reading: Do not charge GST from affordable housing buyers: Government to builders
In its last meeting on January 18, 2018, the GST Council had extended the concessional rate of 12 per cent GST, 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 GST rate, however, comes down to eight per cent, after deducting one-third of the amount charged for the house/flat, towards land cost. This provision was effective from January 25, 2018.
[ecis2016.org] Association demands action against builders enriching themselves under the guise of GST
“All inputs used in and capital goods deployed for construction of flats, houses, etc., attract GST 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 GST of eight per cent. As a result, the builder or developer will not be required to pay GST on the construction service of flats, etc., in cash but would have enough ITC (input tax credits) in his books to pay the output GST,” a finance ministry statement said.
The ministry said builders ‘should not recover any GST payable on the flats from the buyers’. It further said that GST can be recovered from buyers, only if builders recalibrate the cost of the flat after factoring in the full ITC available in the GST regime and reduce the ex-GST price of flats.
Read also : Faridabad Sector 79 property market: An overview
The concessional rate of 12 per cent GST, 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) Affordable housing 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, subsidy is being provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-1/ MIG-2), for the acquisition and construction of houses. The ministry said now the buyers under CLSS would be entitled to interest subsidy as well as to a lower concessional rate of GST of eight per cent.
Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org
Source: https://ecis2016.org
Category: Lifestyle
