Real estate used to be subject to a number of taxes, including VAT and service tax. The taxing structure for real estate has been updated with the introduction of GST. The developer and the buyer both stand to gain significantly from the GST's effects on real estate. Let me share the details of impact of GST on real estate.
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In the past, real estate developers were required to pay entrance taxes, customs duties, VAT, excise duties, etc., on inputs or raw materials. They also have to pay service tax on a variety of input services, including legal fees, labour costs, fees for architects and professional engineers, approval fees, etc. The ITC benefit for taxes like entry tax, customs duty, CST, etc. was not available to developers. This had a considerable impact on the cost as a whole, which ultimately had an impact on the buyer.
The introduction of GST, however, simplified matters for the developers because it greatly reduced their construction expenses. Developers have benefited from the GST's effects on real estate as a result of the new GST law's combination of various taxes and reduction of logistical costs.
What is the impact of the GST on real estate buyers?
Earlier, under the traditional tax system, buyers of real estate were responsible for paying stamp duty, VAT, registration fees, service taxes, and other fees. Additionally, because each state had its own stamp duty, registration fees, and VAT, the price of real estate differed from state to state. Real estate developers additionally had to pay several duties including OCTROI, custom duty, sales tax (CST), etc. for which there was no available credit.
But somehow under the GST law, fixed tax rates of 1% (for affordable housing units), 5% (for non-affordable housing units), and 12% (for commercial units) are applicable to properties still under construction. Also, the purchase of completed or ready-to-move-in residences does not incur a GST rate.
I must have cleared your doubt about impact of GST on real estate.
Read More: How to calculate GST on the under-construction property with example? What is the GST credit? Is GST applicable on the resale flat? Is GST applicable on maintenance charges collected by builders?Your Feedback Matters! How was this Answer?
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What is the impact of GST on real estate?
Rohit
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2023-04-10T18:51:40+00:00 2023-04-12T02:37:46+00:00Comment
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