Recently, the GST council approved a new tax structure plan for housing units. According to the plan, the builders will be given a choice to choose between new tax rates and old tax rates for under construction properties. This will help in resolving the issues related to ITC (input tax credit).
According to the Central Board of Direct Taxes, builders in Ghaziabad, who wish to pay the old rates of GST must inform their respective jurisdictional officers. If they fail to inform, it would be assumed that they opted for the new tax rate.
- Under new tax rate structure, the developers will have to pay 1% GST on the construction of housing under affordable housing segment, while 5% GST is to be paid for other housing projects without ITC.
- Under old tax rate structure, the developers will have to pay 8% GST on the construction of housing under affordable housing segment, while 12% GST is to be paid for other housing projects with ITC.
This plan is expected to address transitional or computational and issues, for example, changing prices and loss of input credits. The council also stated that any property in Ghaziabad (and other location) would be considered as residential property if it consists of nearly 15% commercial space.
No GST Applicable For Ready To Move Projects
Projects which have received a completion certificate will not attract GST, and thus, the benefits shall be passed on the home buyers in the form of ITC, says the finance ministry. Hence, investing in ready to move flats in NH 24 Ghaziabad or other regions is the perfect investment decision.
GST Exemption Applicable For Affordable Housing
The applicable GST for homes purchased under CLSS has been lowered to 8%. The concessional rate of GST has been extended by the GST council for middle-income group-I and group-II, economically weaker section, lower-income group and flats with max. carpet area of 60 square metre.
No GST Applicable On Rental Income
Last but not the least, the GST tax rate structure has brought good news for landlords as well. Properties which are rented out for residential use do not attract GST. However, people who have rented out their properties for commercial or industrial use will have to pay 18% GST, provided they earn Rs 20 lakh annually.
In simple words, new GST rules and tax structure is going to be a milestone in the history of Indian real estate. Home buyers will now find it very easy and convenient to buy their home of dreams.