Good news for first time home buyers! Govt cuts GST on affordable homes from 12% to 8% | LikeWike
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Good news for first time home buyers! Govt cuts GST on affordable homes from 12% to 8%

In what could usher in some relief for the first time home buyers, the government has reportedly cut GST rate from 12 per cent to 8 per cent for houses purchased using the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojna.

 

According to a report in Times of India, a first time homebuyer with a family income of up to Rs 18 lakh per annum will be eligible for a benefit of up to Rs 2.7 lakh while buying a house or apartment of up to 150 square metres (1,615 sq ft) carpet area under the Credit-Linked Subsidy Scheme.

 

Carpet area is the area enclosed within the walls i.e. actual area to lay the carpet. This excludes the thickness of the inner walls.

Those who do not qualify for CLSS will continue to pay GST at 12 per cent for the same house, it said.

 

In November, the Cabinet had approved an increase in carpet area of houses eligible for interest subsidy under the CLSS. This will be applicable for the Middle Income Group (MIG) under PMAY.

 

The GST benefit will also be extended to low-cost housing projects having the infrastructure status where the maximum unit size in the project is a carpet area of 646sq ft. The first-home condition on the buyer will not be applicable in such cases. GST will be levied at 8 per cent notwithstanding if the buyer gets the CLSS benefit under PM Awas Yojna, the report added.

While under the MIG-I category, the carpet area of the houses was increased from 90 square metre to 120 square metre, the area under MIG-II segment, was increased to 150 square metre from 110 square metre.

 

Under the MIG-I category, a four-per cent interest subsidy is provided to the beneficiaries, whose annual income is between Rs 6 lakh and Rs 12 lakh on a loan of up to Rs 9 lakh. On the other hand under the MIG-II category, the beneficiaries with an annual income of Rs 12 lakh to Rs 18 lakh get an interest subsidy of three per cent on a loan of up to Rs 12 lakh. PMAY aims to provide houses to all the urban poor by 2022.

 

Builders as of today are charging buyers on the super built-up area, which includes area of outer walls, balcony and lobbies, stairs and even elevators. RERA is against the practice of super built up area and want to remove it. However, under PMAY, the area of the house is different for all categories and it’s the carpet area and not the super area that is to be looked at.

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