Credit rating agency Moody’s said that the GST rate cut on under-construction flats will boost housing sales but may hit profit margins of builders with withdrawal of input tax credit.
The GST Council decided to cut GST rate on affordable homes to 1 per cent without input tax credit (ITC) from earlier 8 per cent with ITC. The GST on under-construction flats, which is not under the affordable housing segment, has been reduced to 5 per cent without ITC from earlier 12 per cent with ITC.
Fitch Ratings said that the move to reduce GST on under-construction properties and expand the scope of affordable-housing category would improve affordability and support demand. This will boost consumer sentiment and cut transaction costs, which can be as high as 18 per cent in Mumbai after including other taxes such as stamp duty, surcharge and registration fees. Marginal savings are expected on overall transaction costs and more so for affordable housing a
