Page 10 - Banking Finance March 2019

GST UPDATE

GST

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Govt detects Rs 20,000 GST Council cuts tax on under-construction houses to 5%

crore evasion in GST GST Council has cut tax rate on under-construction residential properties and
the affordable housing projects category. The new
effective GST rate for under construction flats has
been brought down from the present 12 per cent
to 5 per cent. The applicable GST rate for afford-
able housing category is now 1 per cent compared
to the present 8 per cent. The new rates will be
applicable from April 1 this year. This means that
the rise in sales figures due to the fresh measure will be visible only in the next
The government has detected Rs. financial year.
20,000 crore worth Goods and Ser-
vices Tax (GST) evasion so far this fis- Announcing the cuts, Union Finance Minister Arun Jaitley said, "The move will
provide a boost to the real estate sector. The sector is burdened with a huge
cal and will take more steps to check
inventory. The cuts would make owning a home cheaper for the common man."
frauds and increase compliance, a
senior tax officer said. Joseph said "In both cases, builders will not be able to claim the input tax credit (ITC) which
between April-February 2018-19, they used to get when the tax slabs of 8 per cent and 12 per cent were appli-
GST evasion worth Rs 20,000 crore cable," he added. To ensure that the builders don't short change the buyers,
has been detected of which the government has created more conditions especially for the affordable hous-
Rs10,000 crore was recovered. ing category. Houses under this bracket have been divided into two categories
- metro and non-metro. The determining criteria for eligibility will be cost and
He said the tax officers detected fake
invoice worth Rs. 1,500 crore which carpet area.
was used to claim illegal GST credit This is a departure from when builders used to charge for "super area of the
of Rs. 75 crore. "We have already houses" under which the buyer used to end up paying more than the total size
recovered Rs. 25 crore and the rest of the house. The GST Council has decided that in metro areas - Delhi NCR (lim-
is on the way," Joseph said. ited to Delhi, Noida, Greater Noida, Ghaziabad), Mumbai, kolkata, Chennai,
Hyderabad and Bangalore, the eligibility for affordable housing would be prop-
Stating that only 5-10% of the busi-
nesses are "black sheep" and bring erties worth Rs 45 lakh and 60 sq metre carpet area. In non-metro cities it would
bad name to the industry, he said the be Rs 45 lakh and 90 sq metre.
government will take more measures According to industry estimates in the top seven Indian cities there are almost 6
to increase compliance, and act lakh under-construction homes lying unsold. Of these almost 35 per cent are priced
against evaders in a way such that below Rs 40 lakh. Since the GST Council has defined affordable housing as those
genuine businesses do not suffer. within Rs.45 lakh budget, more properties qualify for this 'sweet spot' category.

10 | 2019 | MARCH | BANKING FINANCE