Understand The Impact Of GST On Real Estate, From These Five Points


The biggest question in front of property buyers is that the property you want to buy has become cheaper or more expensive after GST is implemented? After two or two-and-a-half months of confusion, GST was introduced in India on July 1, 2017. The answer to GST's impact on real estate depends on these five things:

1. GST is levied only on the under construction projects or incomplete projects. If you have purchased a property after July 1, 2017 and have taken the acquisition certificate then in such a situation, there will be no charge for GST at the sale price.

2. Before the GST was implemented, the buyer had to pay service tax, state-paid value tax (VAT), registration fee and stamp duty on the sale price of the assets under construction. The ratio of service tax and VAT to your property was 3.75 per cent and 4.5 per cent, but it depends on the area of ​​your state, where your property is. In this area, 12 percent GST is levied, but it is just service tax and VAT. You will have to pay registration fee and stamp duty as before, provided the state government does not make any changes in its rates.

3. Does this mean that GST's kill is more costly than the prices of the under construction property, because the rate of service tax and VAT has increased from 4 per cent to 12 per cent GST. Now there is a gap of 8 percent between them?
This is not necessary because the anti-profiting clause in the new GST ensures that the builder has to give any benefit to the customer after taking the input tax credit. In the new GST system, the builder can avail the tax on taxation and input tax on construction and service, which is around 15 to 20 percent of the total cost of construction. This will help in reducing the sale price of the property and the impact of GST will be significantly reduced.

4. Does this mean that after the implementation of GST, all the under-construction properties have become cheaper?

- Not necessarily because the builder can avail the input tax credit compared to the cost of construction, on most projects it is a Bach per square foot of 1200 to 2000 rupees. Now this can be an exception, where the cost of construction can cross this limit. Explain that there is no input credit for the cost of land.

- The builder's input tax credit, which can be passed to the customer, is mostly between 250 and 400 rupees per square feet in the projects.

Only property where the price of land is low and whose sale price is levied with GST, it will be available from Rs. 250 to 400.

5. Effect of GST: Who benefits, to whom is the loss?

The advantage of how buyers will reach
-The customers who purchase the under-construction property are less than 4,000 rupees per square foot, their cost will be lower.

Which buyers will not be affected
- The prices of those customers will not have any effect on the prices, which have taken the property under construction from 4000 to 5,500 rupees per square foot.

These customers in losses
- Those customers who bought the property under construction for a price of Rs 5,500 per sq ft or more, their prices will go up.

The effect of GST on the buyer depends on the level of its investment. Affordable housing segment should be promoted in the new GST system, but if your dreams are big, then surely you have to work hard for your dream home.

Due to the transparency of the GST brought to the industry, the government has greatly benefited. The new GST system will cut a lot of cash transactions or "raw bills" because there will be no input tax credit in it. At the same time, small and marginal construction contractors will need to understand GST well in order to stay in the system. After the new GST system, builders will have to work very hard on input costs and sales pricing strategies so that prices rise in their projects.


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The views expressed in this article are the personal views of the author. MINDBREAK is not liable for the accuracy, completeness, pragmatism or truth of any information given in this article. All the information in this article has been presented as Any information or facts given in this article or views expressed are not of MINDBREAK, and MINDBREAK is not liable in any way for them.

Understand The Impact Of GST On Real Estate, From These Five Points Understand The Impact Of GST On Real Estate, From These Five Points Reviewed by Ankur Lad on September 23, 2017 Rating: 5

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