With an aim to address the housing needs of the lower and middle income households, the Government of India (GoI) launched the Affordable Housing Scheme in June 2015. Compared to a common residential housing, affordable housing units are eligible for lower Goods and Service Tax (GST), which provides big relief to the affordable home buyer at the time of home buying. According to tax and investment experts, a home buyer needs to pay GST at the time of buy but it’s important for them to know what an affordable house means as per the GST.
Speaking on the definition of the affordable housing that makes it eligible for lower GST payment under GST Mumbai-based tax and investment expert Balwant Jain said, “In metropolitan cities like Delhi NCR, Mumbai, Kolkata, Bengaluru, Chennai Hyderabad, etc. if the price of the housing unit is ₹45 lakh or below and the carpet area of the unit is 60 sq meter or below, then the housing unit will qualify as an affordable house in any of the metropolitan city.”
On affordable housing in non-metropolitan cities Amit Gupta, Managing Director, SAG Infotech said, “In non-metro cities, price of an affordable housing will be ₹45 lakh or below but the carpet area can be 90 sq meter or below.” The Managing Director of the SEBI registered tax solution firm went on to add that the GST applicable on an affordable house is currently 1 per cent while in the case of other than affordable housing unit, applicable rate of GST is 5 per cent.