Group of Ministers proposes to increase affordable housing limit to Rs 55 lakh, ET RealEstate

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New Delhi: Task assigned by the Group of Ministers (GoM) Goods and Services Tax Council To consider the application of GST The idea that for real estate the definition of affordable housing People with knowledge of the matter said it should be increased to Rs 55 lakh from the current Rs 45 lakh.

If approved by GST CouncilThis is likely to give a significant boost to the affordable housing sector.

Currently affordable housing attracts 1% GST, while other housing projects attract 5% GST. Input Tax Credit (ITC) facility is not available in both the cases.

The seven-member GoM headed by Goa Chief Minister Pramod Samant is likely to recommend increasing the tax on luxury residences worth more than Rs 15 crore and may not give any relief to Joint Development Agreements (JDAs) on the application of GST.

“There was a consensus that the definition of affordable housing should be expanded for GST purposes, although a majority of members were opposing GST on the JDA,” a person with knowledge of the panel discussions told ET.

The GoM met in Goa last week and is likely to submit its report before the next GST Council meeting to be held in the second week of November. The final decision on the recommendations is taken by the Group of Ministers.

Other members of the GoM include Bihar Deputy Chief Minister Samrat Chaudhary; Uttar Pradesh Finance Minister Suresh Kumar Khanna; Kerala Finance Minister KN Balagopal; Aditi Tatkare, Women and Child Development Minister and GST Council representative for Maharashtra and Punjab Finance Minister Harpal Singh Cheema and Gujarat Finance Minister Kanubhai Mohanlal Desai.

Affordable housing was defined in the 33rd GST Council meeting in February 2019 in terms of flats with carpet area up to 90 square meters in non-metropolitan cities and towns and 60 square meters in metropolitan cities with a value of up to Rs. 45 lakhs.

Metropolitan cities by definition are Bengaluru, Chennai, Delhi-NCR (limited to Delhi, Noida, Greater Noida). Ghaziabad, Gurgaon and Faridabad), Hyderabad, Kolkata and Mumbai.

While rejecting the industry’s request to allow input tax credit on JDA after April 1, 2019, the GoM was not in favor of changes in GST on joint development projects.