GST and the Real Estate

GSA and the Real Estate India

 With the implementation of GST from July 2017, people wanting to invest in the real estate sector as well as dispose of their existing one are curious to understand how GST will impact them.

We have received numerous queries after this move by the government. While it may not be possible to address all individual queries in one go, a few of them are mentioned below:

Have the property prices raised post the GST roll-out?

Overall prices in the real estate sector have increased slightly post the implementation of GST.

As per the government, the properties which are under construction will be charged 18% tax which includes 9% CGST and 9% SGST. The government has permitted the subtraction of land value equal to one-third of the total amount asked by the builder. This is thus, reducing the effective tax rate to 12%.

What will be the impact on the ready-to-move-in properties?

The price of the assets is expected to go high because GST is not applicable on ready-to-move-in properties. The pressure of the tax is to the developers because of which they may charge extra to bear the add-on expenses.

How will the resale of the properties be affected by the GST?

The immovable properties are out of the scope of the existing provisions of GST, and therefore, the seller will not be liable to pay the tax on selling the property.

How will the GST affect various charges such as registration charges, stamp duty, etc.?

As far as stamp duty and registration charges are concerned, they do not come under the scope of GST system. However, it can be expected that the government will include these fees under GST in the coming years.

What will be the effect of GST on EMIs on home loans?

GST is applicable at the rate of 18% on the financial services. This indicates that there are chances that home loan processing charges will increase.

The overall impact of GST will be apparent with time until then the speculations will continue to come up and disappear as well. As of now what we can say is that the GST roll-out is beneficial for both the builders and the customers.

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