Searching for a new 1/2/3 BHK flats in Pune or any other major Indian city, but can’t decide whether to buy it or not because of GST? Read this article and get to know the difference in tax before and after the introduction of GST. Property prices and tax input material always affect the taxes, but this was before the GST rule.
What is GST?
GST, which is Goods and Services Tax, was proposed on 1st of July by central and state government of India. Taxes can be applied from 5% to 28% on certain things from food and gold. Real estate being one of them. Tax of 12% is being charged on property value and under construction buildings where 9% is SGST and other 9% is CGST. All the taxes are subsumed in GST. Banks are also affected by the GST by the reverse tax mechanism.
Is it affecting the real estate and does it help in property purchasers?
It has not only affected tax rates but also the real estate regulation. Rectifying the tax issues have become easier. If you purchase from a dealer who is not registered it will lead to reverse charges on the receiver. GST is type of an extensive tax on production, sale and expenditure of all types of goods and services all over in India. It also has everlasting consequence on real estate.
After considering last few years, there is huge impact and a change on taxes, but the taxes are not constant in each and every state. Now the taxes imposed in real estate sectors are transparent. Few years back, for land and property there were different kinds on taxes imposed by central and state government. Indirect and double taxes are removed which will make the regulation easy and manageable. While building a construction, real estate used to suffer different expenses of the project. Expenses like VAT/CST, custom duties and service tax were faced by them. Introducing GST wasn’t bad at all because now there is no such burden on taxes for real estate builders. No one is much is affected by GST, but rental and under construction taxes are affected.
Instead of paying various taxes, one has to pay GST tax, it will save labour as well as large amount of money. This is a huge advantage and much better than paying previous taxes which were up to 40%. It can be clearly seen that home buyers are being benefited after introduction of GST, whereas stamp duty is still applicable. Cement, sand and steel taxes are high because of various factors for example sand supply will be difficult during monsoon season. If the person is registered under GST he or she has to pay GST on every goods and services. Now the real estate builders only have to pay GST for the construction cost without any additional expenses.
You can buy affordable homes at cheaper rates under GST regime, without worrying about the extra taxes.