Ministers suggest increasing affordable housing limit to Rs 5.5 million
Real Estate

Ministers suggest increasing affordable housing limit to Rs 5.5 million

A group of ministers (GoM) appointed by the Goods and Services Tax Council to examine the application of GST in the real estate sector believes that the definition of affordable housing should be expanded to Rs 5.5 million from the current Rs 4.5 million, according to sources familiar with the matter.

If the GST Council approves this change, it could provide a substantial boost to the affordable housing sector. Currently, affordable housing is subject to a GST rate of 1%, while other housing projects face a 5% levy. Additionally, the input tax credit (ITC) facility is not available in either case.

The seven-member GoM, led by Goa's Chief Minister Pramod Samant, is also expected to recommend increasing the tax on luxury housing priced above Rs 15 crore and may not offer any relief regarding joint development agreements (JDAs) concerning the application of GST.

According to a person aware of the panel discussions, there was a general consensus that the definition of affordable housing for GST purposes should be enhanced; however, most members opposed applying GST to JDAs. The GoM convened last week in Goa and is anticipated to submit its report ahead of the next GST Council meeting, expected in the second week of November. The final decision on the recommendations will be made by the GoM.

Other members of the GoM include Samrat Choudhary, Deputy Chief Minister of Bihar; Suresh Kumar Khanna, Finance Minister of Uttar Pradesh; KN Balagopal, Finance Minister of Kerala; Aditi Tatkare, Minister for Women and Child Development and GST Council representative for Maharashtra; Harpal Singh Cheema, Finance Minister of Punjab; and Kanubhai Mohanlal Desai, Finance Minister of Gujarat.

The 33rd GST Council meeting in February 2019 defined affordable housing, in the case of flats, as having a carpet area of up to 90 square meters in non-metropolitan cities and towns, and 60 square meters in metropolitan areas.

A group of ministers (GoM) appointed by the Goods and Services Tax Council to examine the application of GST in the real estate sector believes that the definition of affordable housing should be expanded to Rs 5.5 million from the current Rs 4.5 million, according to sources familiar with the matter. If the GST Council approves this change, it could provide a substantial boost to the affordable housing sector. Currently, affordable housing is subject to a GST rate of 1%, while other housing projects face a 5% levy. Additionally, the input tax credit (ITC) facility is not available in either case. The seven-member GoM, led by Goa's Chief Minister Pramod Samant, is also expected to recommend increasing the tax on luxury housing priced above Rs 15 crore and may not offer any relief regarding joint development agreements (JDAs) concerning the application of GST. According to a person aware of the panel discussions, there was a general consensus that the definition of affordable housing for GST purposes should be enhanced; however, most members opposed applying GST to JDAs. The GoM convened last week in Goa and is anticipated to submit its report ahead of the next GST Council meeting, expected in the second week of November. The final decision on the recommendations will be made by the GoM. Other members of the GoM include Samrat Choudhary, Deputy Chief Minister of Bihar; Suresh Kumar Khanna, Finance Minister of Uttar Pradesh; KN Balagopal, Finance Minister of Kerala; Aditi Tatkare, Minister for Women and Child Development and GST Council representative for Maharashtra; Harpal Singh Cheema, Finance Minister of Punjab; and Kanubhai Mohanlal Desai, Finance Minister of Gujarat. The 33rd GST Council meeting in February 2019 defined affordable housing, in the case of flats, as having a carpet area of up to 90 square meters in non-metropolitan cities and towns, and 60 square meters in metropolitan areas.

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