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The GST Council approved a sharp reduction in the levy on homes under construction and raised the threshold for affordable housing that will make more purchases eligible for concessional tax, offering substantial relief to buyers ahead of the elections. Starting April 1, homes under construction will be levied 5% GST, against 12%. For affordable homes, GST will drop to 1% from 8%. Homes up to Rs 45 lakh and with a carpet area of up to 60 sq metres in metros and 90 sq metres in non-metro cities will be counted in the affordable segment, according to the new twin definition cleared by the council, which is expected to give a big boost to lower-income housing. The earlier limit was a uniform carpet area of up to 60 sq metres for a house in an approved affordable housing scheme. There will be no input tax credit for GST paid on materials such as cement and steel for the sector at these lower GST rates. “In its 33rd meeting, the GST Council has accorded big relief to real estate sector,” FM Arun Jaitley tweeted. “This (rate cut) will give boost to housing for all & fulfill aspirations of neo/middle classes.” The government said in a statement that “the buyer of house gets a fair price and affordable housing gets very attractive with GST @ 1%”. The GST Council deferred a decision on lotteries, Jaitley said, adding the group of ministers (GoM) will meet again to discuss the proposal. “A reduced effective rate of GST of 5%/1% is good news for the real estate industry as the 12%/8% rate was a bit of a deterrent for buyers of underconstruction properties,” said EY tax partner Abhishek Jain. Intermediate tax on transfer of development rights (TDR), joint development agreement (JDA), lease (premium), floor space index (FSI) will be exempt from GST for such residential property on which GST is payable. ‘Simpler Tax Compliance for Builders’ The government said this will address the cash flow problems faced by the industry. “There are reports of slowdown in the sector and low offtake of under-construction houses which needs to be addressed,” statement said. It would also result in the cost of houses coming down, the government said. “Unutilised ITC (input tax credit), which used to become cost at the end of the project, gets removed and should lead to better pricing. Tax structure and tax compliance becomes simpler for builders,” it said in the statement. “Developers will need to increase the base price to recover the loss of input credit but would need to be cautious given the surge in anti-profiteering investigations for restaurants, in similar circumstances,” said Pratik Jain, partner and leader, indirect tax, PwC. The decision was based on recommendations of a ministerial panel headed by Gujarat deputy chief minister Nitin Patel. Those designated as metro cities are Mumbai, Bengaluru, Chennai, Hyderabad and Kolkata apart from the National Capital Region — Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon and Faridabad. Separately, the Reserve Bank of India had imposed a monetary limit of Rs 30 lakh for non-metros and Rs 45 lakh for metros for affordable housing loans. Builders had been seeking a lower GST rate.

MUMBAI: Global furniture major IKEA Group has entered into a strategic alliance with realty developer Rustomjee Group to provide furnished apartments in the latter’s residential project. This is for the first time that the Swedish multinational has formed any such alliance anywhere in the world. To begin with, IKEA India will provide ready-to-assemble furniture for around 1,200 apartments in Rustomjee’s project Global City Virar near Mumbai. The project will offer 1 and 2 bedroom apartments at prices starting from Rs 34 lakh excluding taxes. “This is a pilot project and we would like to extend this association with IKEA across our similar residential projects. We’ll start delivering the project in two years by December 2020,” said Boman R. Irani, Chairman, Rustomjee Group. “Our alliance will deliver Rs 700 crore affordable furnished homes.” Rustomjee has already delivered nearly 5,000 apartments in the first phase of township Global City and is now launching 1,750 units in the next phase. IKEA furnished homes will be part of these newly launched phase. The IKEA Group is the first major single brand retailer to get Foreign Direct Investment (FDI) approval and plans to open several stores and multiple touch points across the main cities in India. The first IKEA India store opened in Hyderabad in 2018, which will be followed by store in Navi Mumbai this year. IKEA has four land sites in Telangana, Maharashtra, Karnataka and Delhi-NCR and continues to look for more in other major cities.

Last weekend, around two dozen constructions, including residential as well as commercial properties and boundary walls of farmhouses situated on Raghopur road, which runs between sector 114 and sector 115 were demolished by Huda officials. These buildings were on the land, which was meant for constructing the road linking Delhi and Gurgaon. Good news for those who commute frequently between Delhi and Gurgaon. Soon, a swanky new road will provide connectivity between Delhi and Gurgaon. Moreover, the new route will offer a shorter distance for commute from Najafgarh, Dwarka and West Delhi to Gurgaon. According to a TOI report, the new road will be developed under Gurgaon’s Masterplan 2031 and will be linked to Najafgarh-Bijwasan road. Huda administrator Chandrashekhar Khare was quoted in the report stating that an amount of Rs 6 crore has been sanctioned for the project. The construction of the road will start by the end of this month and it will take around two months to complete the project. He also said that the deadline is planned around end of October or early in November this year. Last weekend, around two dozen constructions, including residential as well as commercial properties and boundary walls of farmhouses situated on Raghopur road, which runs between sector 114 and sector 115 were demolished by Huda officials. These buildings were on the land, which was meant for constructing the road linking Delhi and Gurgaon. According to Mukesh Solanki, estate officer 2, Huda, the planning of the road was done almost a decade ago. However, the owners of the properties had approached the court, which ordered a stay, but now, the stay has been lifted. To study and plan the construction of the road as per the Masterplan, Huda’s enforcement wing has already handed over the land to the engineering wing. A passage of around 1.3 km has already been cleared by Huda on which the authority intends to construct the road by the end of this year. In Gurgaon, the road will begin from the road dividing sector 114 and sector 115, and it will end where it merges with Najafgarh-Bijwasan road near Delhi-Gurgaon border. From there, the road will go towards Sector 12, Dwarka in the national capital. It is expected that the new road will divert the vehicles that travel between Gurgaon and Najafgarh, Dwarka as well as parts of west and south-west Delhi, via the Delhi-Gurgaon expressway. Therefore, it is likely to reduce traffic on the highway. With the new road, the travel time will also be reduced as the commuters will have a shorter route to enter Gurgaon and reach their destination. An alternative will also be provided by the link road to over a thousand vehicles, especially since Dwarka expressway won’t be complete for another one year at least.