Recently the 25th GST council meeting took some better decisions regarding the issues struck regarding various industry of India. Now there is some good news for the home buyers as the government has decided lesser GST on the home which is purchased under the Credit-Linked Subsidy Scheme (CLSS). Now the new provision states that under-construction homes that are under the scheme of CLSS will be charged GST at 8 percent instead of 12 percent. But, people who are not eligible for CLSS will be paying higher GST as decided by the authorities.
The lowered 8 percent GST as applicable from 25th January will be for the house acquired or constructed under the CLSS scheme for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban).
Also under the CLSS scheme, the subsidy of interest is being provided on the home loans applied by the eligible urban poor (EWS/LIG/ MIG-I/ MIGII) for construction of house or acquisition. Real estate must not be confused by the GST ambit as it is still not the part of GST but here it is related to the value of land and not the construction part.
How Would Lower GST Help?
The GST council meeting has clarified that the housing construction is already into the higher slab rates which are attracting 18 to 28 percent on many of input materials used in the construction. So as to lessen the burden of already heavy tax slabs the council has taken the decision of lower 8 percent GST on the house purchase and construction. The council stated in the meeting, “It may be recalled that all inputs used in and capital goods deployed for construction of houses attract GST of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting value of land)”
