An advertisment for a real estate agency in Ghaziabad. (Photographer: Anindito Mukherjee/Bloomberg)

Government Wants To Lower GST On Under-Construction And Finished Houses: Modi

The central government bringing under-construction and finished houses under the 5 percent GST slab from the current rate of 12 percent.

“Under construction houses and finished houses, GST, like we did for restaurants, everything under 5 percent. We wanted to do that,” Modi said in an interview to news agency ANI. “But there were reservations by some. So GST Council couldn't do it. It has now gone to the committee. We will try to ensure that the committee report is expedited.”

Earlier a PTI report, citing an unnamed official, had said that the GST Council is likely to take up the matter in its meeting next month.

Currently, the GST is levied at 12 percent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

However, GST is not levied on real-estate properties for which completion certificate has been issued at the time of sale.

The Finance Ministry asked real-estate dealers to pass GST rate cut benefits to buyers, but to no avail. Briefing reporters after the GST Council meeting earlier in December, Finance Minister Arun Jaitley had said that builders can adjust some portion of the 12 percent GST against the taxes paid on inputs like cement which attract 28 percent levy.

“The potential homebuyers feel they are not getting benefited under GST. Certain proposals have come before the Council and the law and fitment committee will look into the matter and the matter will come up in the next council meeting. There was a total consensus that something needs to be done,” Jaitley had said.

Currently, in case of affordable housing projects like Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing schemes of state governments, GST is levied at 8 percent, which can be adjusted by builders against its accumulated input tax credit.

Watch the full interview here: