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02 Apr

By 99loans_admin

Category: News 1

GST Rates Reduced on Affordable Housing 1% and 5% on Prime Properties, Real Estate Tax troubles Ends here. No Comments

GST Rates Reduced on Affordable Housing 1% and 5% on Prime Properties, Real Estate Tax troubles Ends here.

After implementing GST many industries faced great trouble where Real Estate is one among them. The Tax rates doubled when compared to the previous tax regime this influenced not only Developers but also the Consumers/buyers sentiment in real time and forced negative way. The stalwarts in the industry thought if the same situation prevails the key contributor of Indian Economic Growth (Real Estate Industry) may deflate and goes to crisis. To save or prevent the Industry from such crisis Industry Big Boys requested The Government many times to reduce GST rates. At last, the GST Council considered and come forward to take a transition rate decision on industry requests in 33rd meeting held recently.

As per GST’s new amendment, rates were reduced drastically on Ongoing or Under Construction real estate projects. The Rates, for Affordable housing 1%, Remaining Under Construction housing is 5% without ITC, this will come into force from 1st April, 2019.
However this news raises lot of doubts among the home buyers like Will this apply for New Projects only? Weather these rate change implies to Under Construction Housing which were started before 1st April also? If GST paid,  can it be refunded as per new rates? such doubts may storm home buyers brain. Anyways, there is a clarity on GST Rates after the GST Commission’s 34th meeting concludes on Real Businesses.

Revised GST Rates on housing

Builders got free hand on selection of Old or New GST Rates:

Prior to GST implementation, Under Construction Real projects has to pay VAT including Service Tax was 6%. After GST implementation for Affordable Housing the Tax was 8% or 12% with ITC, Ongoing projects (Buildings where construction and actual booking have both started before 1st April, 2019. Due to the rate hike the real estate sales has slowed down and at the same time Tax burden has raised on home buyers, Not only this some other issues were cropped up due GST implementation. Now, the GST Council’s decission gives a great releaf and new hope to the Builders as well as Buyers. Industry’s say is support to the Real Estate is support to economic growth only.

Builder can choose to select either the Old GST Rates or proposed New Rates system. To this effect, Builder has to submit an application form as per GST Format to which system he opts in on or before 10th May, 2019. The Format is available in Chapter 4 of the Central Tax Rate Notification No.03/2019, Dated:29th March, 2019. If the Builder fails to submit the application, GST department assumes that he has selected the New GST Rate slab. Remember, this is one time selection process and once you selected either of the Old or New GST Rates there will not be any changes allowed later, hence it is advised, before selecting the rate the Builder has to think twice and go for it.

Computation of impact of GST revision on net property prices
Lower GST rates may benefit the industry more than buyers

GST Rates on Properties

GST Rate Selection: is it according to Project or as per the Registration?

As per the above Notification Builder has to select the GST System according to the Project only but not as per the GST number. To understand more, One Builder has three different projects in Kukatpally, Jubilee Hills and Vanasthalipuram. He has to submit three different applications for each project in standard format.

Affordable Housing Definition:

The below two rules should satisfied if any immovable property should be considered under Affordable Housing.

1) In Metro Cities the Residential Building / Apartment land area should be upto 60 sqare metres, Non-Metro Cities land area upto 90 Sqare Metres. Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkatta, Mumbai-MMR falls under Metro Cities.

2) Gross Value of the property should not exceed more than Rs.45 lakhs. Gross Value calculation includes Land value, Parking, Prime area, Development expenses and Miscellaneous expenses.

Non-Affordable Housing or Prime Properties Definition:

15% of the land area in a Residential Building or Apartment allotted to Commercial purpose are defined as non-affordable or prime properties. The properties which were not fall within the above definition terms as Commercial Properties.

GST Payments

GST Payments done prior to 1st April, 2019


The issues associated with the Real Estate Industry most importantly keeping in view of the economic or market conditions after the implementation of GST System, the Government of India may keep the rates unchanged for a longer period. Keeping everybody’s financial benefits in view for example Developer, Buyer, Government and Society etc., the Builder should think diligently while selecting the Old or New GST Rates.

GST Application Form as per Notification 

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