Modi government's 'big stakes', under construction houses may be ‘cheap’ before Lok Sabha election

DEC 24 (WTN) - The Modi government can soon give a ‘special gift’ to the general public, after which there is a great hope for relief especially for the middle class people. Let's know what this special gift is. As you know, the Council of Goods and Services (GST) on Saturday reduced the GST rate on 23 items, after which the general public gets substantial relief.

According to information received from the media, it is now being said that in order to give relief to the middle class, now in the GST Council meeting to be held next month, there may be a big decision taken that the under construction residential units and waiting for the complimentary completion certificate may be cheap as the GST rate can be reduced to five percent.

For your information, let you know that the GST rate is 12% on such a flat, which has not got the certificate of work being done. However, there is no GST on the purchase of real estate property, which has got the work-completion certificate at the time of sale.

According to information received from the media, an official said that in this case, the burden of 12 percent GST rate is partly reduced due to the taxes given by builders on construction items. Therefore, the actual rate of GST on construction houses should be around 5 to 6 percent, but the builders are not giving the profitability of the tax paid on the production material.

According to the information, one of the proposals placed before the GST Council is that 80% of the building material should be reduced to five percent of the GST rate slab for builders buying from registered dealers.

For your information, let you know that builders currently pay in cash for the items being used in the construction and consumers are not benefiting from the benefits paid on the tax paid in the purchase of the goods. Therefore, it is believed that they need to be brought under formal arrangement.

At present, there is 18 per cent GST on most manufacturing products, capital goods and services used in construction of flat and house, while Cement is in 28 per cent GST slab.

Here, at present, the GST rate is only 8% on residential plans being run by the Central and State Governments, which are beared by the builder through ITC, including the Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, and Prime Minister Awas Yojna and esidential schemes run by the state governments are covered under this facility.

For your information, let you know that the total tax rate on GSP before construction was very high, with 4.5 per cent service tax plus VAT of 1 to 5 per cent. Not only this, 12.5 percent excise duty was to be paid from 12.5 to 14.5 percent VAT on input materials used in construction. There was also entry tax on input. At the same time, after incorporating ITC, the total GST rate on such buildings was 15-18 percent.

For those who have been talking negatively about GST from time to time, tax on the buildings under construction ‘now’ is a good example that after GST inflation has come down. If the Modi government has been successful in reducing the rate of under construction houses, then the country's middle class people will get a lot of relief.

Where the GST rate in the under construction houses is 12 per cent at present, it will reduce the burden of inflation on the general public if it goes down on 5 per cent. It can be said that this plan of Modi Government will not prove to be less than any ‘boon’ for the BJP before Lok Sabha elections 2019.