India has cut its goods and services tax (GST) rates on under-construction housing properties by more than half in a bid to boost new home sales in the country, with the move likely to benefit Middle Eastern real estate companies operating in the subcontinent.
The GST council announced its decision to reduce the rate from 12% to 5%, with affordable housing GST rates brought to 1% from 8%, as reported by local daily Times of India.
The scope of affordable housing was expanded to homes costing up to $63,385 (INR4.5m) and measuring 60m2 in metro areas and 90m2 in non-metro cities. The new rates will take effect from 1 April, 2019.
Senior trade ministers from India’s government met with the chairman of Dubai's Emaar Properties, Mohamed Alabbar, in December 2018 to discuss the developer's building plans for India.
Alabbar told the delegation that Emaar was “committed to increasing its investment in the Indian market”.
GST is currently levied on payments made for under-construction properties or completed flats for which a completion certificate has not been issued at the time of sale. As such, GST is not levied on real estate properties for which completion certificates have been issued.
Arun Jaitley, India’s finance minister, reportedly said the GST reduction decision “will certainly” boost the local construction sector.
India is increasingly being seen as a source of opportunity for GCC-based firms looking to expand their operations. November 2018 saw Danube Home, the retail arm of Dubai's Danube Group, announce plans to open 35 stores in India over the next decade in an international expansion push.