The Indian Government recently finalized a new regime of taxation known as the Goods and Services Tax which will merge individually applied taxes into one. Various products and services are placed under four tax slabs of 5%, 12%, 16% and 28%.
There were dilemmas and questions related to the impact of GST on the Indian real estate sector, but all got cleared after the central government finalized the tax slabs for the real estate properties. As per the latest GST notification, the completed homes and apartments are placed under the slab of 12% taxation. Along with these, the builders have to pay less GST for inputs such as steel, cement and paints and credit of taxes will be allowed. This will lower the price of the raw materials and cut down the prices of real estate properties by approximately 5%.
According to a survey conducted by CRISIL, a developer at present have to pay excise tax and VAT on raw inputs at the rate of 22.7% for cement and 18.1% for steel varying from one state to another. After the implementation of the GST, cement, paint and other white goods will be taxed at a flat 28% and steel at a flat 18% but GST of flat 12% will be levied on the final unit including the cost of the land.
As of now, the home buyers have to pay 4.5% of the final price of the unit as service tax while taking the possession. Now fixing GST rate at 12% will benefit the consumers and will lower the tax liability.
Also, various government reforms such as the Real Estate (Regulation & development) Act (RERA), Pradhan Mantri Awas Yojna , (PMAY) along with the GST will increase the investment in the realty sector which indirectly will help the GDP of the country to grow.
Goods and Services Tax (GST) is a system of taxation in India which will merge many individually applied taxes into a single tax. The GST will come into force from 1st July 2017 and will allow GST-registered business to entitle tax credit.
A demand letter was raised in June for 60% of the work done, I had selected SBI for my Home loan and with all the efforts i could make disbursement happen only on 3rd July. My builder is saying with all the input credit calculation from his end i will have to pay 3.75% extra due to GST as it is applicable to me since I made the payment on 3rd July, Please let me know, if i am liable to pay this amount as it is going to really harsh on me which would be around 1 lac Rs.
The building where i intend to book a flat is near completion and OC is expected after 20th July. If i book it after receiving the OC after 20th July, will i have to pay the GST ? If yes, at what rate ?
What is the rate of service tax under construction project now and was 2014 .
I own a property which is 10 years old and does not have an Oc but has the comencement certificate. Can i sell my flat . Does the RERA Act prohibit selling this flat.
Dear Domnic, If your buyer insist for OC then you will have to provide the same.
If I wanted to sell the property purchased by me 10 years back in a commercial complex without O C and C C am I required to procure certificate before selling the same....
Will GST help to reduce tax burden on under construction property? E.g. If 70% amount is paid by July 2017, for balance 30% payments will there be any tax reduction?
Just wanted to know whether GST is applicable for a completed apartment which has the Municipality no. and occupancy certificate?
If you have got the OC of the unit before the implementation of the RERA in your state then those units/projects will not come under RERA.
Thanks Apna RERA for the kind of information you provide on RERA. I appreciate your initiative. I want to know will the said GST applicable for re purchasing of homes?
While buying the re-sale property (2nd hand property) which is completed with OC will attract stamp duty and registration charges which payable to the registrar of the concerned state.