GST cut to boost flat sales in Noida

The GST council’s move slashes tax rate on under-construction housing projects from 12% to 5%. It also cut tax rate on affordable homes from 8% to 1%.

The Union government’s decision to reduce Goods & Services Tax (GST) on sales of under-construction housing properties would provide huge relief to homebuyers, said developers on Monday.

Homes costing up to ₹45 lakh (for houses with carpet area of 60 square metre in metros and 90 square metre in non-metros) have been put in the affordable housing category. (Picture for representation)

The move would boost sales of residential properties and positively impact the real estate sector, the builders said.

GST council’s new move slashes the tax rate on under-construction housing projects from the earlier rate of 12% to 5%. The council also cut the tax rate on affordable homes from the earlier 8% to 1%. Homes costing up to ₹45 lakh ( for houses with carpet area 60 square metre in metros cities and 90 square metre in non-metro cities) have been put in the affordable housing category.

The new tax rates would be effective from April 1, 2019. The move is expected to impact the sales of around 1.5 lakh unsold flats in Noida, Greater Noida and Yamuna Expressway authority areas, builders said.

“The decision on GST rate reduction will help homebuyers immensely in both the affordable and the high-end segment. The GST rate cut was much needed to boost the sales in the real estate sector. If anyone buys a ₹1 crore flat, then they will get a benefit of ₹7 lakh after April 1, when the new rates become effective,” said RK Arora chairman, Supertech Limited.

Many developers have pinned their hopes on the new tax rate as the Noida and Greater Noida’s realty sector had been witnessing a slowdown.

“It is a great relief for both the real estate industry and the homebuyers. There is no incentive to postpone buying a home anymore. Homebuyers were shying away from under-construction property due to the high GST. It makes sense now to go ahead and buy a house as the prices are really reasonable. The 1% GST on affordable flats will not hurt the customer,” said Pankaj Bajaj, NCR President, Confederation of Real Estate Developers Association of India (CREDAI), a builders’ lobbying group.

According to ANAROCK Property Consultants data, as many as 5.88 lakh, under-construction homes are lying unsold in the top seven cities, of which as much as 34% of the flats are priced below ₹40 lakh.

“With the qualifying cost for the affordable housing limit stretched to ₹45 lakh, more properties qualify for this ‘sweet spot’ category. The GST cut, coupled with this critical expansion of the category, will induce more sales in homes falling in this budget range – a win-win for both builder and buyers,” said Anuj Puri, Chairman – ANAROCK Property Consultants.