Good News: Only 5% GST on Under-Construction Homes!
Here is the exciting news for home buyers! GST council is considering reducing the existing GST of 12% to 5% on under-construction home.
The actual GST on under-construction homes is around 5-6%, as the 12% rate is charged by the way of taxes paid on inputs by builders.
But, many builders are not providing the benefit amount on the input tax credit (ITC) to consumers.
So the council is planning to channelize formally. According to the sources, there is also a proposal before the council to reduce the GST rate by 5% only for a builder who purchases 80% inputs from registered dealers.
The capital goods, input services, and a majority of construction material used for the construction of houses and apartments have 18% GST rate and cement alone have 28% tax.
Before implementing GST, the GST rate for the under-construction houses had a 4.5% service tax and a value-added tax (VAT) of 1-5% (variable on state), 12.5% on inputs excise duty with 12.6-145% VAT.