The Modi government has brought with it a new tax reform- GST, which will include a lot of Central and State taxes (VAT, Service Tax and et cetera). This new indirect tax reform has been implemented on 1st of July, 2017 and has been in use ever since. GST is expected to increase the GDP by almost 2% and also help with checking on tax evasions. This reform has brought about a lot of changes in the prices of the products but when it comes to the purchase of property, one could only estimate how GST will affect the real estate sector. Will the prices rise? Or will they fall?
Many prospective buyers will hesitate to buy property under the new GST regime, so the government has included a clause in the GST law about anti-profiteering which will help the buyers to receive a benefit of tax reduction. On the other hand, many people, businessmen, analysts have very different opinions when it comes to the impact of GST on the Real Estate market. There has been much estimation regarding it. For example, some are saying that GST will not bring down the prices but will be beneficial for the stockholders in this market. On the other hand, some say that the prices are likely to fall by 1-3% but the impact of it depends on the construction status of the property, whether it is under construction or complete. It may also depend on the location i.e. the state in which the property is located.
Under GST, all the properties under construction will be charged a rate of 12% on the property value, excluding the registration charges and stamp duty but this will not apply to property projects which are complete and ready for possession. GST is 3-4% lower than VAT and Service tax, taken together which is about 7-9% on the given price of the residential property. However, the property developers will benefit from the new tax regime although the price of the raw materials would not change much but there will be a decrease in logistics and transportation costs, which will lead to an overall fall in the final cost of the property. GST consists of a single tax which will help others to easily understand it and not go through the burden of paying multiple taxes but one.
As said above, the previous tax regime had a lot of different taxes- VAT, Service Tax, Octroi which had to be paid differently, but GST enables us to just pay one tax which will save a lot of time and labor. For more information regarding GST or on real estate properties, visit https://chqbook.com/home-loans