How You Can Avail the Benefit of 8% GST under CLSS

Sudip got his first job when he was still in his final years of college. And, that’s when he met Ashima and both decided to get married. Since neither of them was earning enough to afford an apartment of their own in the city, they chose to live in a rented flat.

Today, things have changed for better for families like Sudip’s who couldn’t become homeowners for the lack of fund — thanks to the CLSS Scheme under Pradhan Mantri Awas Yojana. Helping economically weaker section (EWS), low-income group (LIG) and middle-income group (MIG) with the benefit of interest subsidy and other features, this scheme has realized the dreams of many aspiring home buyers.

According to government data, more than 1,65,000 people in urban areas have benefitted from the Credit-Linked Subsidy Scheme (CLSS) during 2015-18. During these three years, over 45 lakh dwelling units have been approved for construction. About 27 lakh houses are in various stages of completion with over 8 lakh houses having been already completed during the period.

This is a direct reflection of what has been the present government’s focus since the time it came to power — ‘Housing for All’. But there’s more good news for home buyers eligible for CLSS.

Home Buying Gets More Affordable with Reduced GST

 In the Union Budget for 2018, the Finance Minister, Arun Jaitley made a landmark announcement of granting infrastructure status to affordable housing. This has been a welcome move for both, the consumer and the real estate industry since housing and infrastructure, we believe, are two important pillars to increase GDP and accelerate economic growth.

What has made affordable housing projects even more lucrative is the slashing down of GST applied to these projects. As per the latest budget, projects using at least 50% of FAR/FSI for dwelling units with carpet area not more than 60 sq. m. now attract a GST of 8%.

The GST council in its statement has stated: “It may be recalled that all inputs used in and capital goods deployed for construction of houses attract GST of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting the value of land).”

For example, if a CLSS eligible person wants to buy a home worth Rs 40 lakhs, he/she can avail an interest subsidy of up to Rs.2.7 lakhs and save an additional Rs 1.6 lakhs in GST.

How Can You Avail the Benefit of 8% GST?

A number of Primary Lending Institutions (PLIs) such as banks, housing finance institutions, and NBFCs are identified for the implementation of the CLSS Scheme. They are required to be registered with the CNAs (Central Nodal Agencies) in order to release subsidy under the scheme. The interest subsidy will be credited to the loan account of beneficiaries through the registered PLIs, which will result in reduced housing loans and EMIs.

Additionally, the Ministry of Housing and Urban Affairs may prescribe a certificate by banks or other lending bodies, on the basis of which the builder may charge the reduced rate of GST on houses constructed or purchased under CLSS.

Generally, a home buyer books a flat from his/her own funds and later on applies for a loan. In this case, the builder will apply the regular rate of GST and subsequently apply the reduced rate of 8% when the buyer becomes eligible for CLSS. The excess GST can be adjusted against the builder’s future GST liability (by issuing credit notes).

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I recently took an appartment which is under construction.So on jan 25 2018 there was a rule passed for gst on housing saying that the gst will be 8% instead of 12% for people who come under PMAY scheme.I booked my appartment after this rule came in but still my builder charged me 12% gst and said that once I get PMAY APPROVED then he will make it 8%.Now recently i got this scheme approved.1/3rd of total amount is paid to the builder and he is saying that he will charge 8% gst only for remaining amount and not on the amount that i paid him already.He says that he has paid 12% gst already to the govt and cannot refund me back.

In this case how can i get that excess gst(4%) refunded.That amount will be 1 lakh which is big for me. So i need some help here asap


Thank you for writing us your query. According to an official communication, the excess GST can be adjusted against the builder’s future GST liability (by issuing credit notes). Reference: F. No 354/52/2018-TRU Dated 7th May 2018, circulated by the Ministry of Finance Department of Revenue, Govt. Of India. However, we would suggest you to consult a Tax expert for further clarity.

prateek saxena

Hi Abhlash,

How you got 8% GST? can you please let me know as my builder is not sure about it


Hi Mr. Saxena, Thank you for writing your query. To avail the reduced GST you need to be eligible for the CLSS. Once you are approved for the CLSS scheme, you can communicate to the developer of your purchased property who in turn will implement the reduced GST.

umesh Gaikwad

hi NK Admin,

when I book the flat that time I paid the 12% GST and I received the CLSS amount after Flat OC received
so can I still claim my 4% GST and Pay the Balance amount on my Last Installment

Umesh Gaikwad


Hi Mr. Gaikwad,
Thank you for reaching us.
Kindly share your mobile number to understand your query better.


As far as your query is concerned, once your application for the PMAY is approved you need to approach the developer for the adjustment.
You may also refer to the last paragraph of this blog where the same has been mentioned.

Rohit Gore

Hii NK Team,

I have purchase the under construction flat (from land owner share) disburse the 95% of amount and I am eligible and apply for PMAY-CLSS MIG1 scheme and it will approve in minimum couple on months in future. In this case how to avail the concessional 8% GST rate.

How to claim the already paid GST, if i received the possession and then approved the CLSS application



Thank you for reaching us. As far as your query is concerned, once your application for the PMAY is approved you need to approach the developer for the adjustment.
You may also refer to the last paragraph of this blog where the same has been mentioned.

tanmaya ranjan mishra

I have already availed the subsidy under CLSS and my bank has issued a certificate showing my account no, date and amount of subsidy credit, revised EMI etc. But my builder is asking for a certificate showing the property address and CC to him for GST subsidy whereas the bank is denying to give the same.
Please suggest how to proceed


Thanks for writing us your query. Kindly share your contact number to understand the concern better.


I have booked flat with 12% GST so shall I wait for registration to deduct 4% GST from remaining paymnet or go for full payment with 12% GST and after flat registration once CLSS will come can get get 4% GST. Please let me know that after registration will builder is liable to return the 4% GST to me.


Javed Mansuri

Hi Team,

I have booked a under construction property and have availed the PMAY scheme for which the subsidy has been credited to my loan account.
All my payments are made with 12% GST, can I ask builder to refund or adjust the 4% GST amount charged and show him the bank statement as a proof for pmay.

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