Key Recommendations of 33rd GST Council Meeting (dt. 24 Feb. 2019)

Latest Updates on Key Recommendations of 33rd GST Council Meeting (dt. 24 Feb. 2019)

To provide relief to the home buyers and to boost the housing sector, GST Council in its 33rd meeting (dt. 24 Feb. 2019) has made key recommendations by way of reduction in GST rates, i.e. tax rates slashed to 1% for affordable housing segment and 5% for other residential properties (effective rate without ITC), w.e.f. 1 April, 2019, as under:

i) under construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale (other than affordable housing segment): from 12% (with ITC) to 5% (without ITC),

ii) affordable housing segment: from 8% (with ITC) to 1% (without ITC).

As per new definition of affordable housing segment, homes with value upto Rs 45 lakh and carpet area of upto 60/ 90 sq metres in metros/ non-metro respectively will be eligible for concessional tax rate under the segment.

However, GST Council had deferred the issue relating to uniform tax rate in the case of lottery tickets for further discussions. Now GoM will discuss the issues of differing tax rates in the case of state-organised and state-authorised lottery (i.e. 12% and 28%) under the existing GST law.

It may be noted that its likely to be the last meeting of the GST Council before going for next general elections this year, since code of conduct will be effective early next month during which no policy decisions can be announced.

GST Council in its 34th Meeting (dt. 19 March 2019) has finalised the operational modalities for implementation/ transition of recommendations made in its 33rd Meeting (dt. 24 Feb. 2019)>> Key Recommendations of 34th GST Council Meeting (dt. 19 March 2019)

CBIC Press Release dt. 24 Feb. 2019: Key Recommendations of 33rd GST Council Meeting

1. Real estate sector is one of the largest contributors to the national GDP and provides employment opportunity to large numbers of people. “Housing for All by 2022” envisions that every citizen would have a house and the urban areas would be free of slums. There are reports of slowdown in the sector and low off-take of under-construction houses which needs to be addressed.

To boost the residential segment of the real estate sector, following recommendations were made by the GST Council in its 33rd meeting held today:

2. GST rate: 

i) GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment;

ii) GST shall be levied at effective GST of 1% without ITC on affordable housing properties.

3. Effective date: The new rate shall become applicable from 1st of April, 2019.

4. Definition of affordable housing shall be:- 

A residential house/ flat of carpet area of upto 90 sqm in non-metropolitan cities/ towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).

Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

5. GST exemption on TDR/ JDA, long term lease (premium), FSI: 

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.

6. Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose.

7. Advantages of the recommendations made: 

The new tax rate in principle was approved by the Council taking into consideration the following advantages:-

i) The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.

ii) Interest of the buyer/consumer gets protected; ITC benefits not being passed to them shall become a non-issue.

iii) Cash flow problem for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.

iv) Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing.

v) Tax structure and tax compliance becomes simpler for builders.

8. GST Council decided that the issue of tax rate on lottery needs further discussion in the GoM constituted in this regard.

The decisions of the GST Council have been presented in this note in simple language for easy understanding.  The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

Related Posts:

Key Recommendations of 34th GST Council Meeting (dt. 19 March 2019)

GSTR-3B Due Date (Jan. 2019) Extended from 20 Feb. to 22 Feb. 2019

Key Recommendations of 32nd GST Council Meeting (dt. 10 Jan. 2019)

Key Recommendations of 31st GST Council Meeting (dt. 22 Dec. 2018)

Key Recommendations of 28th GST Council Meeting (dt. 21 July 2018)

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