Looking to buy a house? Wait! GST on residential properties likely to be slashed

A ministerial panel set up to look into GST-related issues of the real estate sector on Friday indicated that it would recommend taxing under-construction residential properties at 5 per cent, down from 12 per cent currently.

The Group of Ministers headed by Gujarat Deputy Chief Minister Nitin Patel also favoured 3 per cent tax on the affordable housing category, down from 8 per cent. However, claiming input tax credit would no longer be possible on such transactions, an official said after the meeting of the GoM.

The panel set up by the Goods and Services Tax (GST) Council is expected to finalise its report in a week`s time and table it in the next meeting of the Council for final approval.

GST is currently levied at 12 per cent on premium housing and 8 per cent on affordable housing on payments made for under-construction properties where completion certificate has not been issued at the time of sale. No GST is charged if a property is bought after the issue of completion certificate.

The government had last month constituted a seven-member GoM to look into GST-related issues of the real estate sector. Its agenda was to analyse the tax rate of GST on the under-construction residential properties for boosting the realty segment.

There had been demand from many quarters to slash the rate on the segment to 5 per cent from the current 12 per cent.

Other members of the GoM are finance ministers of five states -- Sudhir Mungantiwar of Maharashtra, Krishna Byre Gowda of Kerala, T.M. Thomas Isaac of Karnataka, Manpreet Singh Badal of Punjab and Rajesh Agarwal of Uttar Pradesh. Goa`s Panchayat Minister Mauvin Godinho is also a member.