MUMBAI: The GST council’s decision to reduce the applicable GST rate for home purchases under the CLSS-PMAY (Credit Linked Subsidy Scheme-Pradhan Mantri Awas Yojana) to 8% is the latest measure to ease demand side constraints, especially in the low cost, EWS and affordable housing segments.
This concession has also been extended to apartments up to 60 sq mtrs carpet area and given infrastructure status as per the affordable housing definition. The scheme is also extended to the MIG-I and MIG- II categories where higher apartment sizes were recently notified by the government, thus having an impact on this housing segment as well.
“The potential buyers across these segments are extremely price sensitive and are impacted by even a small change in their overall outlay towards home purchases. Therefore this drop in the applicable GST coupled with the interest subsidy will allow significant savings on the purchase of homes. For the developers too, this drop in GST rates will be of great benefit as the higher Input Tax Credit that they can avail on construction materials and services can be used to offset the GST that a buyer may pay, further incentivising pricing of homes and buying activity,” says Ramesh Nair, CEO & Country Head, JLL India.
“Further, developers would have loved to see the GST on input costs of construction and material for affordable and priority housing coming down as well. It currently ranges from 18% – 28% making it restrictive to create low cost housing in high demand areas. We look forward to the budget to see if the same will be addressed. Such an SOP will give new lease of life to affordable housing and LIG Housing,” added Nair.
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