No clarity on GST rate for CLSS

Created on 13.03.2019 14:57:44
No clarity on GST rate for CLSS

When the GST Council dropped rates on affordable houses to 1% and the rest to 5%, both without input tax credit, it was meeting a demand from the consumers and industry.

However, this 4% difference in GST between the two categories has brought fresh dismay to middle-income buyers, who wish to avail the affordable housing tag.

The GST note circulated so far says that 1% GST is applicable upon 60 sq m houses in metros, costing less than Rs 45 lakh, and upon 90 sq m houses in non-metros also costing less than Rs 45 lakh.

However, there is no clarity whether 1% GST is applicable upon houses of 160 sq m and 200 sq m which fall under the Credit-linked Subsidy Scheme (CLSS), and get 4% and 3% subsidy, respectively, for buyers with an annual income in the range of Rs 12-18 lakh.

The second big issue is that even when you are within the required price and income brackets and home sizes, the clearance of CLSS is taking way far too long.

No clarity on GST rate for CLSS

Many consumers have complained to Magicbricks on our live Facebook show, ThisWeekIn-Property (TWIP) that even weeks and months after applications have been submitted, the CLSS eligibility status is still unclear. Chances are your bank is as frustrated as you.

Despite being one of the best schemes in recent years, which can help achieve the ambitious target of a pucca house for every Indian family by 2022, the 75th year of our Independence, the operational efficiency of the scheme is sorely wanting.

This is how the scheme is envisaged:

If you have a salary between Rs 3 lakh and Rs 6 lakh per annum, you get a maximum subsidy of 6.5% on the first Rs 6 lakh loan that you took from a lending institution to buy a house of 30-60 sq m in carpet area.

Of this, up to Rs 2.8 lakh is credited to your account directly and translates into a monthly subsidy of nearly Rs 2,700 per month in your EMI for a loan tenure up to 20 years.

If you earn between Rs 12 lakh and Rs 18 lakh per annum, you can buy a house of between 160 sq m and 200 sq m and get a subsidy of 4% and 3%, respectively, on money borrowed from lending institutions to buy your house. This translates into a monthly drop in EMI of around Rs 2,200. Till now, nearly 4 lakh customers have availed such subsidies across states.

A leading banker said that while the awareness amongst consumers is growing and many are applying for the scheme (nearly 4,000-5,000 applications per month), the backend systems leave much to be desired.

The bank must upload the applications in the required format into the computer system of the National Housing Bank (NHB). This system, the bankers says, is slow and uploads can take 5-10 days at a stretch.

The banker, who hires staff for this job, incurs the cost of poor productivity because the master system does not work. After the form is filled, there is a NHB delays clearing the form. Even their queries are raised after 1-2 months, and the entire system of form upload must be repeated to even respond to a minor query. During this period, customers have no idea if their request for CLSS is being met, as the bank cannot answer this query till it is approved by the NHB.

There is also a restriction upon banks to process not more than 7,000 applications at a time. So, others are in queue and only those many applications can be uploaded as the number cleared by NHB. This consumes time and customer wait increases, even as the bank is unable to conform to customers if their subsidy will be cleared or not.

On an MBTV show, the PMAY mission director, Amrit Abhijat, assured that the government is planning to increase the number of clearing agencies to bring more efficiency. However, in the light of the GST issue as well, the government would have to consider this issue quickly and resolve it.



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