Frequently Asked Questions About GST on Real Estate
Dec 23, 2019 Home Trading Steps
Even after two years of GST applicable to real estate, there seems to be a lot of confusion among the homebuyers regarding the same. We answer the FAQs about GST in real estate.
What is the applicable GST rate on the purchase of a flat?
For the units that are a part of affordable housing (units with Rs 45 lacs), the applicable GST rate is 1 percent the total cost of the property. On other units that are not in the affordable housing segment, the applicable GST rate is 5 percent. It is worth noting that the builders do not get to enjoy the benefit of the Input Tax credit (ITC) on the new rates.
What is the GST rate applicable to the purchase of shops?
The new rate for the GST of the shops is 5 percent the total value of the unit. The old rate with ITC applicable was 12 percent.
The new rates are applicable to which projects?
The initial confusion among the homebuyers is the applicability of the new rates. The new rates will be applicable on all projects that have started after 1st April 2019. For the ongoing or under construction projects, it depends on the builder if they want to switch to the new rates.
If I booked my flat earlier, do I have to pay the old GST rate?
If the builder is sticking to the old rates, then the buyer will have to pay the old GST rate. However, if the builder decides to switch to the new rates, then the buyer will pay the GST at the new rate of the outstanding amount.
Is GST have to be paid on the resale home?
GST is the goods and service tax, and since the resale homes do not fall into this category, the buyer will not have to pay the GST for the resale home.
Is GST applicable on ready to move in units?
The projects which have received the occupational certificate, the GST does not apply to them. It is advised that the buyer carefully examines the tax breakup as the builder might try to recover the GST amount in some way or other.
Is GST applicable on land purchases?
As no goods and services are involved in buying and selling of land, hence no GST is applicable on land parcels.
Is stamp duty payment necessary after stamp duty payment?
The GST regimen does not cover the stamp duty and registration charges, and hence the buyer needs to pay them separately. There have been demands that the stamp duty payable shall be scrapped, but since most of the tax revenue comes from the stamp duty, the chances are slim to none.
Are landlords obliged to pay GST?
The landlords who earn their rental income by renting their property do not have to pay GST. However, if the landlord is renting out a commercial space with the annual rental income of more than Rs 20 lacs, then they have to pay the GST of 18 percent.
Is there a way to avoid paying GST?
The builders are obligated to pay the GST, and so are the buyers. However, the market has been witnessing a slowdown in sales and to boost the same the builders are now offering the exemption or discount at the GST payment.
What is the applicable GST rate on the purchase of a flat?
For the units that are a part of affordable housing (units with Rs 45 lacs), the applicable GST rate is 1 percent the total cost of the property. On other units that are not in the affordable housing segment, the applicable GST rate is 5 percent. It is worth noting that the builders do not get to enjoy the benefit of the Input Tax credit (ITC) on the new rates.
What is the GST rate applicable to the purchase of shops?
The new rate for the GST of the shops is 5 percent the total value of the unit. The old rate with ITC applicable was 12 percent.
The new rates are applicable to which projects?
The initial confusion among the homebuyers is the applicability of the new rates. The new rates will be applicable on all projects that have started after 1st April 2019. For the ongoing or under construction projects, it depends on the builder if they want to switch to the new rates.
If I booked my flat earlier, do I have to pay the old GST rate?
If the builder is sticking to the old rates, then the buyer will have to pay the old GST rate. However, if the builder decides to switch to the new rates, then the buyer will pay the GST at the new rate of the outstanding amount.
Is GST have to be paid on the resale home?
GST is the goods and service tax, and since the resale homes do not fall into this category, the buyer will not have to pay the GST for the resale home.
Is GST applicable on ready to move in units?
The projects which have received the occupational certificate, the GST does not apply to them. It is advised that the buyer carefully examines the tax breakup as the builder might try to recover the GST amount in some way or other.
Is GST applicable on land purchases?
As no goods and services are involved in buying and selling of land, hence no GST is applicable on land parcels.
Is stamp duty payment necessary after stamp duty payment?
The GST regimen does not cover the stamp duty and registration charges, and hence the buyer needs to pay them separately. There have been demands that the stamp duty payable shall be scrapped, but since most of the tax revenue comes from the stamp duty, the chances are slim to none.
Are landlords obliged to pay GST?
The landlords who earn their rental income by renting their property do not have to pay GST. However, if the landlord is renting out a commercial space with the annual rental income of more than Rs 20 lacs, then they have to pay the GST of 18 percent.
Is there a way to avoid paying GST?
The builders are obligated to pay the GST, and so are the buyers. However, the market has been witnessing a slowdown in sales and to boost the same the builders are now offering the exemption or discount at the GST payment.
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