GST Council gives Deadline of May 10 to Builders for opting Old Rates
As we all know that at the 34th GST council meeting, the government has already given approval to the new GST rates applicable for the Real estate sector. The GST council had decided to make the new GST rates on housing sector mandatory from 1st April 2019.
However, the realtors and the developers having GST registration were given a one-time option to opt for one of the 2 options, either old or new GST rates on housing.
The Ministry of Finance has now set the deadline for making a choice between the previous & revised GST rates on real estate till 10th May 2019.
1. What has the government said about the new GST rate on housing?
The Finance Ministry of India has clearly notified that Real estate developers having GST registration can now choose between the old and the revised GST rate only till May 10. If they fail to avail this option, they will be simply considered to have migrated to the new GST rates.
2. What if the builders opt for old GST rates?
At the 33rd GST Council meeting last month, it was clearly explained how the old and revised GST rates would apply on the real estate projects.
- If the realtors having GST registration opt for the 12% GST rate on under construction property, they will be able to claim an input tax credit (ITC).
- If they choose 5% GST rate they won’t be able to claim the input tax credit.
- Similarly, in the case of the affordable housing segment, the old 8% GST rate can be opted with input credit, while the revised 1% GST rate can be chosen without ITC.
3. What is the definition of affordable housing?
At the 33rd GST Council meeting, the definition of affordable housing was also redefined. As per the new definition, the flats of value up to â‚¹45 lac and having a carpet area of up to 60 sqm in tier-I cities and 90 sqm in case of tier-II cities, are considered as affordable houses. The tier-I cities are as follows-
4. Which other measures are taken by the government regarding GST on housing?
Some of the additional corrective measures taken by the government regarding GST on housing are as follows-
- The Central Board of Indirect Taxes and Customs (CBIC) has also directed the real estate companies who have GST registration and will be migrating to the new GST rates, to prepare books of accounts with regard to input credit. They have to repay the excess of input credit used, to the government within 24 easy instalments.
- Furthermore, the CBIC has directed the builders to prepare a project-wise account of inward supplies (purchases) from all the suppliers who are having GST registration and those who are unregistered.
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