In May 2018, the present government will enter the last year of its tenure, and the ambitious mission of ‘Housing for All by 2022’ will complete four years of its existence. To achieve this mission, several schemes have been launched since 2014. A major step in this direction was the Pradhan Mantri Awas Yojana (PMAY) that was launched on June 1, 2015. Earlier, the scheme was confined to economically weaker sections, but under the ‘urban’ tag it now benefits people whose yearly income is below Rs 18 Lakh.
There is more to cheer in the affordable housing segment. The government has slashed the goods and services tax (GST) rate to 8% from the previous 12% for affordable housing.
So, what does this mean?
The concessional GST rate is applicable for houses constructed under the credit-linked subsidy scheme (CLSS) for the economically weaker section (EWS), lower-income group (LIG), middle-income group-1 (MlG-1), and middle-income group-2 (MlG-2) under the Housing for All (Urban) Mission.
Also, low-cost housing projects that have been granted infrastructure status will enjoy the benefits of the rate cut. Real estate developers will now attract GST rate of 8% for projects in the affordable segment.
Under the CLSS scheme, first-time homebuyers with an annual income of up to Rs 18 Lakh per annum can avail monetary benefits while buying a house of up to 1,615 sq. ft. carpet area.
Unfortunately, those who do not qualify for the CLSS will continue to pay GST at 12%.
PMAY (U): Progress so far!
- In order to implement the PMAY (U) scheme, all the states/UTs (except Delhi) have signed the Memorandum of Agreement with the Government of India.
- As for the number of housing loans disbursed under the CLSS, Rs 924 crore worth of interest subsidy has been disbursed in 47,857 housing loan accounts, as per the PMAY (U) report card released in July 2017.
The government is working hard to achieve housing for all by 2022, but there is still a long way to go. If the industry’s dream of reduced GST rate for all properties, infrastructure status for housing, and single-window clearance becomes a reality in this Union Budget, then the mission of building 1.2 crore homes by 2022 can be achieved!
