GST Council may cut tax on construction material
The goods and services tax (GST) Council will consider a proposal to reduce GST rates on more items used in construction to 18% from 28%, as the government looks to create more jobs and boost the economy ahead of the 2019 general elections.
If the GST Council approves the proposal in its 19 July meeting, it could be a shot in the arm for both homebuyers and builders. The idea is to bring down taxes to aid economic growth, said analysts.
The move comes days after the government’s decision to relax rules that would enable more homebuyers to access the interest subsidy scheme. At present, raw material such as cement and paints come under the 28% tax slab. However, many other items used in construction are in the 18% slab.
Construction is a labour-incentive sector that contributes 8% to India’s gross domestic product (GDP). After a marginal growth of 1.3% in 2016-17, construction activity had picked up pace to grow at 5.7% in 2017-18. In fact, in the fourth quarter of 2017-18, construction growth was in double digits at 11.5%.