GST Council promotes affordable housing for the masses

New Delhi [India]: The Goods and Services Tax (GST) Council in its 25th meeting held on January 18, had made several important recommendations for the housing sector which are expected to promote affordable housing for the masses in the country.

These recommendations which came into effect from January 25, include a proposal to extend the concessional rate of GST of 12 percent (effective rate of eight percent after deducting one third of the amount charged for the house, flat towards the cost of land or undivided share of land) in housing sector to construction of houses constructed, acquired under the Credit Linked Subsidy Scheme (CLSS) for Economically Weaker Sections (EWS), Lower Income Group (LIG), Middle Income Group-1 (MlG-1), Middle Income Group-2 (MlG-2) under the Pradhan Mantri Awas Yojana (Urban).

The Credit Linked Subsidy Scheme (CLSS) is one of the components of Pradhan Mantri Awas Yojana (Urban).

Under this component, subsidy would be provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIG-II) for acquisition and construction of house.

The credit linked subsidy would also be available for housing loans availed for new construction and for addition of rooms, kitchen, toilet, to existing dwellings as incremental housing.

However, the maximum annual income for eligibility of beneficiaries under the scheme can be up to Rs. 18 lakhs.

The GST Council has also recommended that the benefit of concessional rate of GST of 12 percent (effective GST rate of eight percent after deducting value of land) applicable to houses supplied to existing slum dwellers under the in-situ redevelopment of existing slums using land as a resource component of Pradhan Mantri Awas Yojana may be extended to the houses purchased by persons other than existing slum dwellers also.

This would make the in-situ redevelopment of existing slums using land as a resource component of Pradhan Mantri Awas Yojana more attractive to builders as well as buyers.

Another recommendation of the council is to include houses constructed for ‘Economically Weaker Section (EWS)’ under the Affordable Housing in partnership (PMAY) under the concessional rate of GST of eight percent (effective rate after deducting value of land).

This will support construction of houses up to 30 sqm carpet area.

In addition to the above, the council also recommends to extend the concessional rate of 12 percent to services by way of construction of low cost houses up to a carpet area of 60 sqm in a housing project which has been given infrastructure status under notification No. 13/06/2009 dated 30th March, 2009.

The said notification of Department of Economic Affairs provides infrastructure status to Affordable Housing.

GST Council has also decided to give exemption to leasing of land by government to any governmental authority or government entity. (ANI)