Now the house will have to buy cheaper, middle class will save up to Rs 7.5 lakh; Big benefits of GST 2.0

GST 2.0: If you are planning to buy a house, then this Diwali can give you great relief because the government is busy in simplifying the GST structure of the country. Under the central government’s proposal, at present, four slabs of GST, 5 percent, 12 percent, 18 percent and 28 percent will be reduced to two main slabs- 5 and 18 percent. For this, it is proposed to impose 40 percent GST on luxury and sin goods. These changes are expected to be approved in the GST Council meeting to be held in New Delhi on 3-4 September.

Real estate sector has great advantage

Experts believe that the real estate sector will benefit the most by improving GST structure. Construction materials like cement, steel, tiles and paints are expected to reduce the price, which can reduce the prices of flats. Currently, 28 percent on cement and 18-28 percent tax on steel, tiles and paint. If they are put in 18 percent slab, the prices of the flat can be reduced by Rs 150 per square ft, that is, a savings of up to Rs 1.5 lakh can be saved on 1,000 square feet apartments.

Current GST structure of real estate

• 5 percent GST is installed at under construction flats of more than 45 lakhs.
• 1 percent GST is imposed on affordable housing up to 45 lakhs.
• There is no GST on ready-to-move flats.
• There is 28 percent on cement, 8 percent on steel, 28 percent on paint and 18 percent GST on tiles.

What is the matter of input tax credit (ITC)?

Since 2019, developers are not allowed to claim ITC on construction materials. That is, GST (18-28 percent) is added directly to the prices of flat on construction materials. For example, if the price of a flat of 1,000 square feet is Rs 25 lakh, then due to lack of ITC, an additional tax of Rs 5 lakh can be levied.

Real estate experts believe that this improvement can lead to savings of up to 1.5-7.5 lakhs, especially the middle class and affordable housing segment will benefit from it as GST on building materials will be affordable than before, which will benefit the middle class.

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The announcement of GST Council will be held on September 3 and 4, on which the whole country is eyeing