Impact of GST on real estate in last one year

Impact of GST 🔻

In 2017, the Goods and Services Tax (GST) eliminates the taxation complexity in India. In simple terms, the unified tax reform replaces the multiple taxes levied by the Central and State governments. GST subsumed of all the indirect taxes, including excise duty, commercial tax, octroi tax/charges, Value-Added Tax (VAT) and service tax.

Talking about its impact on the residential real estate sector on its anniversary, GST has instilled a positive sentiment among homebuyers. It is obvious that implementation of GST may not be impactful in price correction of the residential real estate over the short term. However, the new tax reform will benefit the stakeholders in the long run. Unquestionably, the sector will improve on the back of a simplified tax structure in the years to come, claim experts. The GST is applicable on all under-construction properties at 12 per cent (excluding stamp duty and registration charges). The tax is not applicable to completed and ready-to-move-in projects.

The announcement by Central Government to reduce GST rate from 12 per cent to 8 per cent for affordable homes coupled with the credit-linked subsidy scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) would fuel housing demand across the country. The GST rate cut will be given to first-time homebuyers with a family income of up to Rs 18 lakh per annum while buying a house of up to 150 sqm (1,615 sq ft) carpet area under the CLASS. However, homebuyers who do not qualify for CLASS will have to pay GST at 12 percent. The GST rebate will also be given to low-cost housing projects with infrastructure status where the maximum carpet area of the house is 646 sq ft. The first-home buyer condition is not applicable here.