{"id":3146,"date":"2019-12-14T12:15:29","date_gmt":"2019-12-14T06:45:29","guid":{"rendered":"https:\/\/aktassociates.com\/blog\/?p=3146"},"modified":"2019-12-14T12:15:29","modified_gmt":"2019-12-14T06:45:29","slug":"gst-on-affordable-housing","status":"publish","type":"post","link":"https:\/\/aktassociates.com\/blog\/gst-on-affordable-housing\/","title":{"rendered":"Applicability of GST On Affordable Housing"},"content":{"rendered":"

Our present government is taking a lot of initiatives to make the life of an average person stressfree. For this, they had issued many schemes like Make in India or Digital India or Housing for all.<\/span><\/p>\n

\"GST<\/p>\n

As per the Central government\u2019s 5-year plan, till 2024, every person shall have its own house and the government is making all the efforts to make this possible.\u00a0<\/span><\/p>\n

The first step taken by the government is boosting the real estate market in India by making it compulsory for the builder to make the flats for EWS category up to a particular portion and also recently government has revised the rates of GST for real estate<\/a> entities by reducing them to 1% or 5% as the case may be. In this article, you will get a full understanding of the applicability of GST in affordable housing.<\/span><\/p>\n

Meaning of the term \u2018Affordable Housing\u2019<\/strong><\/p>\n

Before understanding the applicability of GST, it is necessary to understand the meaning of the term \u2018Affordable Housing. Let\u2019s understand the term of Affordable Housing by the below table:<\/span><\/p>\n\n\n\n\n\n\n\n
Particulars<\/span><\/td>\nConditions<\/span><\/td>\n<\/tr>\n
Affordable Housing for Metro cities<\/span><\/td>\n1. A residential house\/flat having carpet area up to 60 sqm.<\/span><\/td>\n<\/tr>\n
2.\u00a0The gross amount charged cannot be more than INR 45 Lakhs.<\/span><\/td>\n<\/tr>\n
Affordable Housing for non-metro cities<\/span><\/td>\n1. A residential house\/flat having carpet area up to 90 sqm.<\/span><\/td>\n<\/tr>\n
2.\u00a0The gross amount charged cannot be more than INR 45 Lakhs.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Here the metro cities mean Chennai, Bengaluru, Delhi NCR (restricted to Noida, Delhi, Greater Noida, Gurgaon, Ghaziabad, Faridabad), Kolkata, Hyderabad, and Mumbai.<\/span><\/p>\n

From 1st April 2019, GST Rates for Affordable Housing has been changing and new rates have been applicable:<\/span><\/p>\n

With effect from 1st April 2019, the new effective GST rate shall be 1% (without input tax credit) on the construction of\u00a0<\/span>affordable housing<\/span>. The GST rate of 1% is applicable to all the projects commencing on or after 1st\u00a0April 2019.<\/span><\/p>\n

Option available for the ongoing projects i.e. which are not completed till 31.03.2019<\/b><\/p>\n

Those projects which have been started before 1st April 2019 and not been completed by 31st March 2019 for the construction then the Real estate entity shall be given an option to either continue with the old GST rate of 8% or convert into 1%.<\/span><\/p>\n

Such Real Estate entities can choose any one option and whatever the option would be chosen by such entity, it would be applicable to them permanently on all projects.<\/span><\/p>\n

Note:<\/strong> It is to be noted here that \u2018ongoing projects\u2019 means those projects which have been started by receiving the commencement certificate; however, a certificate for completion of such project has not received till 31.03.2019.<\/span><\/p>\n

Note: <\/b>The option for continuing with the old rates is only applicable for ongoing projects. Projects for construction started at any time after 31.03.2019, the new rates shall be applicable to such real estate entities.<\/span><\/p>\n

Let\u2019s understand this with a diagram:<\/b><\/p>\n

\"GST<\/p>\n

What are the conditions to be satisfied by the entity for the new GST rate of 1%<\/b><\/p>\n

The promoters\/builder shall be required to fulfill all of the following conditions to avail the benefit of GST lower rate of 1%:<\/span><\/p>\n

Such Entities engaged in the real estate, opting for the new rates, will not be eligible for availing the input tax credit (ITC).<\/a><\/span><\/p>\n

It would become compulsory for the entity to purchase 80% of the value of the inputs and input services from the registered persons.\u00a0<\/span><\/p>\n

Also, in such 80% value following shall not be included:\u00a0<\/span><\/p>\n