8% GST on houses under PMAY from today
The Goods and Services Tax (GST) council in its meeting held on 18th January has recommended concession in the rates GST for homes purchased under the Credit Linked Subsidy Scheme (CLSS). For under-construction homes that form a part of CLSS will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent. However, people who are not eligible for CLSS will continue to pay higher GST.
The concessional rate of GST of 12 percent (effective rate of 8 percent after deducting one-third of the amount charged for the house towards the cost of land) will henceforth from today be applicable for houses constructed or acquired under the CLSS for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban). Under CLSS, the interest subsidy would be provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIGII) for acquisition or construction of house.
So far, houses acquired under CLSS attracted an effective GST rate of 18 percent (effective GST rate of 12 percent after deducting value of land). The concessional rate of 12 percent was applicable only on houses constructed under the other three components of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban), namely (i) Redevelopment of existing slums using land as a resource component; (ii) Affordable housing in partnership with other entities and (iii) Beneficiary-led individual house construction / enhancement. The exemption has now been extended for houses acquired under the CLSS component as well. Therefore, the buyers would be entitled to interest subsidy under the scheme as well to a lower concessional rate of GST of 8 percent (effective rate after deducting value of land).