34th GST Meeting: Clarification on GST Tax rate on Real Estate Sector
We all know that during the 33rd GST council meeting that took place on the 24th February 2019, numerous reliefs were introduced for the home buyers. With a view to boosting the affordable housing segment in the real estate sector, substantial GST rate reductions were by the GST council in its 33rd meeting. GST council had slashed GST rates for under construction flats from 12% to 5%, and in the affordable segment from 8% to 1%, with effect from 1st April 2019.
Very recently, the 34th GST Council meeting was held through Video conferencing. The council has now given consent for the new regulations in the Real estate sector. The GST council has now given choice to the real estate developers having GST registration to choose from the old & new GST rates. However, there are certain conditions with it.
Let us understand this in detail.
#1. What new decision has been taken regarding the Real estate sector?
The GST council has given approval for the new GST rates for Real estate projects that were introduced at the 33rd meeting. These will be mandatory from April 1, 2019.
However, real estate developers having GST registration shall be given a one-time option to choose from the old & new GST rates.
#2. How can builders choose from old & new GST rates?
As per the decision of the 34th GST Council meeting,
- The promoters of the real estate projects who have GST registration shall be given a one-time option to pay GST tax at the old rates.
- The old GST rate on real estate was 12% or 8% in the affordable segment, where Input Credit was also available.
- The above GST rate is applicable to ongoing projects. This includes those buildings where construction and the booking have also started before 1st April 2019, and have not got completion certificate as on 31st March 2019.
- Hence, if the construction and the booking have begun after 1st April 2019, new GST rates shall apply (which are 5% & 1% respectively). Here, the Input Credit will not be available.
- Thus, the option has been given for the prescribed time frame and where the same has not been exercised within the time limit, new GST rates shall be applicable.
The real estate developers and promoters of Real estate projects have to consider these points while dealing with their clients.
If you require any further assistance regarding GST registration, please feel free to contact our business advisor at 8881-069-069.
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