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