GST: The Most Frequently asked questions about Real Estate answered!

In India, the recent uniform tax rate implemented since July 2017 – GST i.e. Goods and Services Tax has given rise to many questions in people’s minds with its implementation, different rates and regulations on each and every product. So here we are, with some simple answers to all your doubts on Real Estate influenced by GST.

Buying of houses and properties of any sort was a very tedious job for a layman before the implementation of this tax system. With the advent of GST all other indirect taxes, except registration and stamp duty, has been removed. The process of transaction becomes transparent for both parties now with only GST charged all under or at 12% of the property value. This, however, excludes registration and stamp duty charges. Furthermore there is uniformity in sales as the sale value does not get affected by area or location advantages. If you buy a ready to move in property, then no indirect taxes are applicable at all.

Developers will avail increased profit margins in Real Estate Business with input tax credits, reduction in costs of development due to reduced cost of logistics. The construction costs under the new regime however will remain fairly unchanged. The Tax rates have become simpler with no Central Excise, Entry Taxes or VAT involved. For Home Loans, the property rates have had a slight rise with 18% GST implementation; however this will exclude EMIs from Home Loans already taken, before the GST.

For buying of office spaces, resale of houses or any constructed property, GST will not be implemented as an immovable property does not come in the purview of Goods or Services in any way. For maintenance charges, excluding electricity and water supply however, GST is implemented at 2.5% if the charges are equal to or higher than 5000INR. This taxation, however, excludes Stamping and Registration charges of properties. With the transparency in taxation and the benefits of the price reduction for the buyer, GST is all set to reduce the Real Estate prices across India, if at all, by 1% to 3%.