Recommendations of the 33rd GST Council meeting

Following are the recommendations for 33rd GST Council meeting held on 24th February 2019 as per the press release issued by Ministry of Finance.

To boost the residential segment of the real estate sector, following recommendations were made by the GST Council in its 33rd meeting.

1. GST rate:
1. GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment;
2. GST shall be levied at effective GST of 1% without ITC on affordable housing properties.
2. Effective date:
3. Definition of affordable housing shall be:-

Particulars	Carpet Area	Carpet Area
A residential house/flat having Value upto Rs 45 Lakhs	90 Sqm for Non Metros	60 Sqm for Metros cities

Metropolitan Cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR).

4. GST exemption on TDR/ JDA, long term lease (premium), FSI:

Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.

5. Advantages of the recommendations made:

The new tax rate in principle was approved by the Council reported to be taking into consideration the following advantages:-

1. The buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%.
2. Interest of the buyer/consumer gets protected; ITC benefits not being passed to them shall become a non-issue.
3. Cash flow problem for the sector is addressed by exemption of GST on development rights, long term lease (premium), FSI etc.
4. Unutilized ITC, which used to become cost at the end of the project gets removed and should lead to better pricing.
5. Tax structure and tax compliance becomes simpler for builders.

For details click Source PIB