Finance Ministry: No GST On Competed Projects, Finance Ministry
Dec 26, 2018 Real Estate News
Recently, the finance ministry clarified that those projects that have received completion certificate do not attract GST and this benefit should be passed on to home buyers. GST for projects under construction is set at 12 per cent, with effect from July 2017.
While the affordable housing scheme has a GST of 8 percent, in the case of joint development agreements of a project build between landowners and developers, the tax is at 18 per cent.
The finance ministry also announced that the council might consider bringing the real estate under the purview of the new tax regime.
As of now, the option of getting full input set-off credit that builders enjoy on ongoing projects is not applicable to ready-to-move-in flats. If that changes, it would mean higher costs for homebuyers of ready-to-move-in apartments, according to builders.
Landlords who have rented their houses for the residential purpose do up or have to pay GST in the earner rentals. But for commercial and industrial rentals, 18 percent tax is applicable if the earning is over INR 20 lakh annually.
On November 3, the GST council set the rates for the new tax regime that would range from 5 to 28 percent, with standards at 12 and 18 percent. Luxury things would be taxed at 28 percent.
While the affordable housing scheme has a GST of 8 percent, in the case of joint development agreements of a project build between landowners and developers, the tax is at 18 per cent.
Things to know
The government decided to reduce the applicable GST rate for home buy under the Credit-Linked Subsidy Scheme (CLSS) of Pradhan Mantri Awas Yojana (PMAY), which is 8 percent. This concession was extended to even constructed/acquired houses under the CLSS for the economically weaker section (EWS) and to the lower to middle group income. This GST concession has also been extended to apartments of carpet area up to the 60-square metre.The finance ministry also announced that the council might consider bringing the real estate under the purview of the new tax regime.
As of now, the option of getting full input set-off credit that builders enjoy on ongoing projects is not applicable to ready-to-move-in flats. If that changes, it would mean higher costs for homebuyers of ready-to-move-in apartments, according to builders.
Landlords who have rented their houses for the residential purpose do up or have to pay GST in the earner rentals. But for commercial and industrial rentals, 18 percent tax is applicable if the earning is over INR 20 lakh annually.
On November 3, the GST council set the rates for the new tax regime that would range from 5 to 28 percent, with standards at 12 and 18 percent. Luxury things would be taxed at 28 percent.
Impact of GST on real estate
The real estate sector is estimated to account for about 5 per cent of the gross domestic product (GDP) of India. The industry faces issues for macroeconomic conditions and fiscal policy decisions such as VAT, service tax, stamp duty and registration fees. With the launch of GST, it will simplify tax compliance and minimise the scope for double taxation.Slightly higher GST rate may be acceptable to buyers.
The impact of GST on buyers could be minimal for resale properties. For under-construction property transactions, buyers will have to pay VAT and service tax. In all these transactions, most of the buyers do not carry out a detailed study on taxes.Builders love GST
GST is expected to bring down the project cost for developers, thereby decreasing property purchase cost. GST proposes to roll multiple taxes into one bringing more liquidity into the market and boosting home sales.Looking for property portal?
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