GST Rate Cut: Will Housing Sector be brought under 8% GST Slab?

GST Rate Cut is on the cards, as hinted by Prime Minister Narendra Modi yesterday. The next GST Council meeting is slated to be held on Saturday, 22nd December 2018, and a bold shuffle in the GST rates for the Housing sector is expected to be brought on table for boosting an otherwise slump housing market. Currently, the housing sector falls under the GST Slab of 12% which is a barrier in attracting value homebuyers. However, the affordable housing schemes such as Pradhan Mantri Awaas Yogna (PMAY) and the likes attract 8% GST only. It is being widely speculated that GST Rate Cut from 12% to 8% can be introduced in the next GST Council Meeting, which will bring all housing projects under a common roof of 8% GST Rate, bringing in relief to a surfeit of home buyers that do not come in the ambit of affordable housing schemes. Another proposal that the Finance Ministry may present is to bring in all segments of housing, whether affordable, mid-buyer or luxury, under one flat GST Rate of 5% sans Input Credit that builders can claim presently for the GST paid by them on building material like cement, iron, bricks, tiles, among others. GST Rate Cut in housing sector will have domino effect on revenue generation. Experts are of the notion that a GST Rate Cut from current 12% to either 8% or 5% (without input credit) will not interfere with the fiscal revenue earned by the centre at present from the Goods and Services Tax collections from the Housing Sector, since the rate cut will boost sales, hence revenue and thereby GST collection in return. Opposition has already hailed PM Modi’s GST Rate Cut announcement, though with a pinch of salt, calling it ‘Belated Wisdom’. Though it is only to wait and watch what is in store for the home buyers.