Rate of GST on real estate before 31st March 2019

Out of these aforesaid, upto 31st March 2019, GST at 12% was leviable (after 1/3rd deduction towards land value) on ‘supply of real estate before completion’. Concessional rate such as 8% was applicable for units qualifying for Affordable Housing[1].

In comparison to erstwhile Service Tax (@ 4.50%) and State VAT (@ 1%) regime, GST rate of 12% was much higher (in-spite of increased credit flow). Additionally, it is pertinent to note that real estate transactions are subject to Stamp Duty[2]. Stamp Duty also creates cascading impact on real estate sector.

 

Effectively, the Real Estate sector is burdened with two taxes GST plus Stamp Duty[3].

Globally, there are different practices, for taxation of real estate, as few countries have property taxes (similar to stamp duty in India) whereas most others have included real estate under the ambit of GST / VAT.

1.3 Reconsideration of rates by 33rd and 34th GSTC meeting

The 33rd and 34th GST Council meeting on 24th February 2019 and 19th March 2019, in its Press Release (‘PR’) recommended to implement, from 1st April 2019, the revised rates for residential properties as under:

  1. GST @ 1% without ITC for affordable housing properties
  2. GST @ 5% without ITC for residential properties[4] other than affordable segment
  3. GST @ 12% with ITC for commercial properties (other than specified ones which will attract GST @ 5%)

1.4 Deduction towards land / undivided share of land

It may be noted that the its yet to specified whether the new rates are after abatement for land or whether additional deduction for land value will be available (for eg. effective rate for affordable housing, after land deduction of say 1/3rd, will be 0.6667%).

The 33rd and 34th GST Council meeting on 24th February 2019 and 19th March 2019, in its Press Release (‘PR’) recommended to implement, from 1st April 2019, the revised rates for residential properties as under:

1.4 Deduction towards land / undivided share of land

It may be noted that the its yet to specified whether the new rates are after abatement for land or whether additional deduction for land value will be available (for eg. effective rate for affordable housing, after land deduction of say 1/3rd, will be 0.6667%).

 

The 33rd and 34th GST Council meeting on 24th February 2019 and 19th March 2019, in its Press Release (‘PR’) recommended to implement, from 1st April 2019, the revised rates for residential properties as under:

  1. GST @ 1% without ITC for affordable housing properties
  2. GST @ 5% without ITC for residential properties[4] other than affordable segment
  3. GST @ 12% with ITC for commercial properties (other than specified ones which will attract GST @ 5%)

1.4 Deduction towards land / undivided share of land

It may be noted that the its yet to specified whether the new rates are after abatement for land or whether additional deduction for land value will be available (for eg. effective rate for affordable housing, after land deduction of say 1/3rd, will be 0.6667%)

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