Recommendations made during the 33rd GST Council meeting held on 24th February, 2019

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
“lottery distribution”

  1. 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
    homebuyers.

  2. 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.

  3. 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.

  4. 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.

  5. 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.