Affordable housing has received a boost over the past year, on account of benefits of lower tax rate and input tax credit. Being out of GST ambit, demand for ready-to-occupy properties is also growing. The initial announcement out effective GST at 12% after factoring in one-third abatement for land value. However, in tandem with its stated objective of ‘Housing for All’ by 2022, rate for affordable housing was cut to 8% with effect from January 25.
The reduced tax is applicable to up to 645 sq ft homes purchased through the credit linked subsidy scheme under the Prime Minister Awas Yojana, as per changes recommended at the GST Council meeting.
“Affordable housing has received encouragement through reduction in tax rate. Ready-to-move-in properties have also benefited as more homebuyers are showing preference towards buying such apartments to save on GST,” said Sachin Menon, head-indirect taxes, KPMG.
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 ..