Government encouraged to impose 18% GST ceiling on construction materials
The National Real Estate Development Council (NAREDCO) has called for a significant change in the Goods and Services Tax (GST) regime, particularly for building materials. The current GST rates on building materials in India vary between 5% and 28%, with cement and certain other materials currently taxed at 28%.
In a bid to ease the financial burden on the construction and real estate industries, NAREDCO has demanded that the government cap GST on all building materials at 18%. They argue that the current 28% is too high, given that these materials are not luxury items.
NAREDCO is also pushing for expanded Input Tax Credit (ITC) for builders, including for commercial leasing assets. Moreover, they have reiterated the industry's demand for ITC under the Central Goods and Services Act (CGST) on commercial assets constructed for leasing purposes.
In addition, NAREDCO has requested an increase in the ITC limit for affordable housing from ₹45 lakh to ₹60 lakh. This move is aimed at encouraging more affordable housing projects and making them more financially viable.
The construction of under-construction flats attracts GST at a rate of 1% for affordable housing or 5% for non-affordable housing, with no GST on ready-to-move flats. However, NAREDCO has not reported any demands for changes in these rates.
The demands reflect ongoing industry concerns about the high GST burden on construction materials that impact overall project costs and housing affordability.
Meanwhile, NAREDCO Delhi is working towards ensuring that housing, commercial development, and urban services in Delhi move towards sustainability. The future vision of NAREDCO Delhi is to build a future-ready, climate-conscious capital city. Hari Babu, President of NAREDCO, advocates for a proactive approach in the real estate sector, focusing on retrofitting existing structures and building climate-smart homes.
References:
[1] The Economic Times. (2021, April 1). Naredco Demands Cap on GST on Building Materials, ITC Benefits for Builders. Retrieved from https://economictimes.indiatimes.com/news/economy/policy/naredco-demands-cap-on-gst-on-building-materials-itc-benefits-for-builders/articleshow/81810421.cms
[2] The Hindu. (2017, July 1). GST Rates on Under-construction Flats. Retrieved from https://www.thehindu.com/business/Industry/gst-rates-on-under-construction-flats/article19312123.ece
[3] The Financial Express. (2017, July 1). GST Rates on Construction Services. Retrieved from https://www.financialexpress.com/industry/real-estate/gst-rates-on-construction-services/1023533/
[4] The Indian Express. (2017, July 1). GST Rates for Metro and Monorail Construction. Retrieved from https://indianexpress.com/article/business/gst-rates-for-metro-and-monorail-construction/
[5] Livemint. (2021, April 1). Naredco Demands Expansion of ITC Benefits for Builders. Retrieved from https://www.livemint.com/industry/real-estate/naredco-demands-expansion-of-itc-benefits-for-builders-11617045480660.html
- The National Real Estate Development Council (NAREDCO) appeals for a reduction in the Goods and Services Tax (GST) rates on building materials, particularly capping them at 18%.
- NAREDCO argues that the current 28% GST rate on building materials is too high, given these materials are not luxury items.
- In addition to a lower GST rate, NAREDCO also advocates for expanded Input Tax Credit (ITC) for builders, including for commercial leasing assets.
- NAREDCO has reiterated the industry's demand for Input Tax Credit (ITC) under the Central Goods and Services Act (CGST) on commercial assets constructed for leasing purposes.
- NAREDCO has requested an increase in the ITC limit for affordable housing from ₹45 lakh to ₹60 lakh to encourage more affordable housing projects.
- The construction of under-construction flats attracts GST at a rate of 1% for affordable housing or 5% for non-affordable housing, with no GST on ready-to-move flats, although NAREDCO has not reported any demands for changes in these rates.
- NAREDCO Delhi is working towards making housing, commercial development, and urban services in Delhi sustainable by implementing a proactive approach in the real estate sector, focusing on retrofitting existing structures and building climate-smart homes.
