Know of the GST rates before purchasing a property

You should always have a thorough understanding of GST rates prior to buying any property. GST (Goods and Services Tax) was rolled out in July 2017 in order to simplify the entire taxation regime and now subsumes several indirect taxes such as Service Tax, VAT, stamp duty, excise and registration fees. Real estate will draw GST of 12% and there will be full input tax credit as well. The things covered under the purview of this rate include construction of a building, complex, civil structure or a portion that will be sold to fully or partly to any buyer. The value of land is also included in the entire amount charged from the recipient of the service. GST will not apply for ready to move in properties in the country.

GST will not apply when you have purchased a property post the issuing of the completion certificate to the real estate developer. This will be considered as a ready to move in property. GST will also not apply if you have made the full or part payment to your developer prior to the GST roll out. However, you will have to fork out 4.5% in service tax accordingly. GST is 18% on under-construction properties, flats and commercial properties but 1/3rd is taken as the land value/undivided land share supplied to the developer of a property. The rate thus comes down to 12% on the under-construction property with total input tax credit.

Resale properties are considered ready to move into and hence there will be no GST on the same. GST rates on affordable homes purchased under the Credit-Linked Subsidy Scheme or CLSS will be 8% since 1/3rd will be deducted for covering the land cost. Several indirect taxes and other duties are usually paid by real estate developers while constructing any property and these are often passed onto end users. However with GST, all taxes have been subsumed into one rate and this will lower property costs overall. This will have a positive impact on sales volumes of homes in the country.