Following the government’s decision to cut the Goods & Services Tax (GST) rates for under-construction properties to 5 per cent from 12 per cent, the demand for residential properties is anticipated to experience a boom in the sector. While revising the definition of affordable houses, the government has reduced GST to marginal 1 per cent for such homes. Earlier, the effective rate for affordable housing was 8 per cent.

Residential properties which are under- construction attracted a rate of 18 per cent and an effective rate of 12 per cent after factoring one-third abatement for the value of land whereas the residential properties which are ready-to-move-in do not attract GST if they’ve already received Occupancy Certificate (OC).

The government’s agenda to push affordable homes is visible in the decision to reduce GST to a mere 1 per cent for the segment. Lowering the tax burden on home buyers will push demand in the affordable housing segment which will bring in more developers in building affordable homes.  This will also help in reaching the target of ‘Housing for All by 2022’.

Mr. Pradeep Aggarwal, Founder and Chairman, Signature Global says, “The lowering of GST on affordable housing will not only boost the sector and the developers but also the sentiments of the end-users. It will also help in augmenting the economic and GDP growth in the country. Affordable Housing is now ruling the market of the real estate sector and with the government’s decision of lowering the GST for the segment; it’ll continue to drive the market in the upcoming years.”