Don't charge GST from affordable housing buyers: Govt to builders

The government today asked builders not to charge any GST from home buyers as the effective GST rate on almost all affordable housing project is 8 per cent which can be adjusted against the input credit.

It said builders can levy GST on buyers of affordable housing projects only if they reduce the apartment prices after factoring in the credit claimed on inputs. In its last meeting on January 18, the GST Council had extended the concessional rate of 12 per cent GST for construction of houses under the Credit Linked Subsidy Scheme (CLSS) to promote affordable housing, which has been given infrastructure status in 2017-18 Budget.

The effective GST rate, however, comes down to 8 per cent after deducting one third of the amount charged for the house, flat, towards land cost. This provision has effective from January 25.

"All inputs used in and capital goods deployed for construction of flats, houses, etc attract GST of 18 per cent or 28 per cent. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8 per cent. "As a result, the builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST...," a finance ministry statement said.