The Modi government on Sunday slashed taxes on the sale of new homes and announced the transfer of Rs 2000 each into the accounts of over one crore farmers to woo voters ahead of the Lok Sabha elections.
The GST Council approved to slash taxes on affordable housing to a meagre 1% from the existing 8%. On all other under-construction houses, the GST was reduced to 5% from 12% at present. Affordable homes are those which cost below Rs 45 lakh.
Finance Minister Arun Jaitley, who chaired the GST Council meeting, said: “This will give a boost to housing for all and fulfil aspirations of neo/middle classes.”
The council also altered the definition of affordable housing, stating that any house built on an area of 60 square meters or less in the metro cities will now be categorised as affordable housing. For non-metro cities, the area would be upto 90 square metres.
“Real estate sector is one of the largest contributors to the national GDP and provides employment opportunity to large number of people. ‘Housing for All by 2022” envisions that every citizen would have a house and the urban areas would be free of slums,” a government press release said.
“The Centre had got large representations from the real estate sector for tax cuts to help a prolonged slump in sales. But the move, which has come closer to elections, is unlikely to help builders or buyers as both are likely to wait until poll uncertainties are over,” ANAROCK property consultants said.
Real estate data confirmed that there were as many as 5.88 lakh under-construction homes lying unsold in the top seven cities, including Bangalore. Of these, 34% were priced below Rs 40 lakh alone.
Another scheme announced by Prime Minister Narendra Modi from Gorakhpur in Uttar Pradesh, which sends the largest number of MPs to Lok Sabha, seeks to provide Rs 6,000 per year to small and marginal farmers in three installments. It was announced in the interim Budget on February 1.
On Sunday, banks deposited Rs 55 lakh into accounts of 1.01 crore farmers, with Modi saying those who have been left out will get the amount soon.
However, digitised land records and databases are so scant in India that the details of only a fourth of 10 crore beneficiaries have been uploaded
on the Centre’s records till now. Most of the beneficiaries are from Gujarat, Tamil Nadu, Maharashtra and Uttar Pradesh.
The Opposition Congress slammed the move with senior leader P Chidambaram calling it a “cash-for-vote” day. He said nothing can be shameful in a democracy than bribe for votes.
