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GST – A boon or bane for home buyers?

by chartered housing Luxury Apartments

Planning to buy property this year? You must be looking at the real estate developers in Bangalore and seeing what kind of properties are on offer. Would you opt for villas in Bangalore? Or would you prefer apartments in Bangalore? Before that, you should understand the implications of the Goods and Services Tax (GST) that has come into effect. Is this a boon or bane from the perspective of home buyers? Will one of the plots in Bangalore offered by leading developers be more expensive or less? Read on for more on how GST will play out for home or plotted development buyers in the city.

 Before GST, the realty industry dealt with multiple taxes that were made applicable during different stages of construction or buying/selling. With GST, there is a unified taxation system. However, a buyer needs to pay registration charges and stamp duty when he or she buys one of the apartments in Bangalore or any other city in the country.

 GST on under-construction properties

 It needs a more long-term approach to assess the pros and cons of a taxation system like the GST on real estate. Expert opinion is that GST will benefit both builders/developers and buyers in the long run. As things stand, GST is not levied on ready-to-move in apartments or villas in Bangalore or any other city in the country. If you are buying an under-construction property, you will have to shell out a GST of 12 per cent. This is after taking into account that one-third of cost is the value of land and 18 pc GST is levied on two-thirds of cost of property under-construction. However, real estate developers in Bangalore, as also the rest of the country, would need to pass on the benefits of input tax credit to the buyer. The 12 per cent with ITC is for projects that are yet to obtain an occupancy certificate.

 It is important to note that GST will not be levied on land, as land is treated as an immoveable property. However, GST may come into the picture if any other supply is made along with the land.

 Greater transparency

 It has merely been a year since the implementation of GST, so going forward it is hoped that there is greater clarity on input tax credit integration. In the pre-GST era, developers had to pay a variety of taxes such as service tax, customs duty, apart from costs pertaining to building materials and labour chargers. They also had to seek services of architects and designers, and the burden of all these put together would be passed on to the buyer. Now, with GST, construction costs will come down,  because of ITC. This means prices of homes will come down, which is a boon for buyers. What’s more, in the long run, implementation of GST will bring in a great level of transparency in real estate transactions. It also separates the good developers from the not-so-good ones, and eventually brings consumer trust and confidence among buyers towards reputed and credible developers.

 


About chartered housing Freshman   Luxury Apartments

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Created on Jul 31st 2018 08:24. Viewed 185 times.

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