The GST Council held its 33 rd GST Council meeting on Sunday, 24 th of February, 2019. The
Finance Minister of India, Mr. Arun Jaitley chaired the meeting of the GST council. The
meeting covered the rate rationalization of “under-construction” residential properties and
GST rate cut in Non-affordable Housing sector: The housing sector got a big boost
with the GST Council unanimously agreeing to lower the GST rate of “under-
construction” properties to 5% from the current 12%. The rate cut was proposed to the
GST council by the Group of Minister’s formed by the council in January-2019. The real
estate sector will however, not be allowed to claim the Input Tax Credit (ITC) on the
inputs used. This will eliminate the concern regarding developers not passing on the
GST benefit to the homebuyers. Further, the unutilized ITC, which was added to the cost
of project at the end, will now be completely removed to bring about a fair pricing to the
GST rate cut in affordable Housing sector: The GST council has reduced the rate of
affordable housing sector to 1% from the current 8% (after rebate of 33% on 12%) to
provide a huge relief to the real estate sector. The Council has defined the affordable
housing sector as follows:
i. In Metro cities, properties costing up to Rs. 45 lakhs and having carpet area of up to 60 sq. mtrs.
ii. In case of non-metro cities, properties costing up to Rs. 45 lakhs and having carpet area of up to 90 sq. mtrs.
The above rate cuts in real estate sector will be effective from 01 st of April, 2019. The
notification to this effect will be released soon after it is passed by the Council.
GST council has also proposed exemption on Joint Development Agreements (JDA),
Transfer Development Rights (TDR), long lease premiums and FSI (floor space index).
The Council stated that the intermediate tax on such development rights will be exempt
from GST for the residential properties on which GST was payable earlier. This will also
further boost the real estate sector, particularly, the redevelopment projects, which were
stalled since last 2 years due to uncertainty revolving around applicability of GST.
The GST Council did not take any decisions regarding the rate rationalization on
Cement, which is the main input material in the construction industry and currently under
the 28% slab.
The GST Council also did not discuss the reduction in rate in case of Lottery distribution
services and deferred the topic it to its next meeting.