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GST Council cuts tax rate on under-construction flats to 5%

The Goods and Services Tax (GST) Council, headed by Union Finance Minister Arun Jaitely, in its 34th meeting has cut tax rate on under-construction housing properties to 5 per cent without input tax credit (ITC), from the existing 12 per cent. This step has been came a big relief to home buyers. Currently, the GST is levied at 12 per cent on payments made for under-construction properties or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

The Council also slashed GST rate on affordable housing to 1 per cent from the current 8 per cent and expanded the scope of affordable housing to those costing up to Rs 45 lakh and measuring 60 sq metre in metros and 90 sq metre in non-metro cities. However, builders will not be able to claim ITC under the new GST rates. Meanwhile, GST is not levied on real estate properties for which completion certificate has been issued at the time of sale. The new tax rates will come into effect from April 01, 2019.

Talking on the GST reduction, Finance Minister Arun Jaitley has said this decision will certainly give boost to construction sector. Besides, the GST Council has deferred its decision on lotteries. Jaitley said that the Group of Ministers (GoM) will meet again to discuss the proposal. Currently, state run lotteries attract 12 per cent GST, while state-authorised ones attract 28 per cent.

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