Recently, certain things were brought under the purview of GST including the real estate sector as it was hampered with various indirect taxes. After the implementation, there has been a lot of confusion based on the rates and benefits. At the time of buying a property, the primarily important thing which has to be done is to know about the rates and benefits. The main reason to bring the real estate sector under GST was that it was burdened with various indirect taxes such as Value Added Tax, Service Tax, Excise Duty, Stamp Duty and Registration fees.
In order to make it clear to all the buyers and builders it was mentioned clearly that Real Estate Sector comprises of construction of a complex, building, civil structure intended for a sale wholly or partly. The rate at which the GST was set with full tax credit was at 12%. These included all the under-construction properties but had excluded the ready-to-move-in properties. It also held that there will not be any GST if the payment is made before the regime either wholly or partly but 4.5% service tax will be applicable. It has been stated that all the under-construction flats, properties or commercial properties will be charged only 12% although the actual rate is 18 %. The Credit Linked Subsidy Scheme (CLSS) is deemed to provide inexpensive houses for the weaker and lower sections of the society. The GST rate for these houses was held to be 8% and not 12% as one-third was deducted for the cost of the land. Both the Buyers as well as Builders will be benefitted as a builder pays various kinds of indirect taxes and passed on the other costs to the end users. Based on the rollout of GST, all the rates have been combined into one and the cost of the property has been reduced. This move was brought into action in order to boost up the home sales and also to bring about clarity and uniformity in taxation.
Courtesy/By: V.S Krishna
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19 Feb 2018
