The soon to be launched Good and Service Tax (GST) is expected to revolutionise the way taxes are levied across many major industries. If you are looking to invest in high-rise apartments and purchase a home after the proposed date of GST’s implementation (July 1), you will come across some revisions in real estate taxation. As a property buyer, there are four possible routes you can take with respect to real estate investments:
- Purchasing under-construction property
- Purchasing a newly launched property
- Purchasing a ready-to-occupy property
- Purchasing a plot of land
Here’s a summary of the impact of GST on various types of property investment:
GST impact on under-construction property
Post GST, the tax rate is expected to be 12% for under construction projects. The overall cost of the under-construction property is unlikely to change significantly. Home loan EMIs on a under-construction property are slated to get marginally cheaper.
GST impact on newly launched properties
Newly launched properties are expected to receive similar GST implication as to that of under-construction properties.
GST impact on a ready-to-occupy property
Ready-to-occupy properties, which have received a Completion Certificate, have no service tax implications and will continue to be exempt from service taxations post-GST. The affordable housing segment will also be exempt from GST rates.
GST impact on plot of land
Sale of land will be exempted from GST implication but stamp duty will continue to be charged. However, if a land is leased out, GST charges will apply.
Long-term impact of GST
Once the initial teething troubles with GST implementation are resolved, GST should prove to be a blessing for property buyers. The tax reformations are yet to be fully announced with regards to housing projects but are predicted not to hinder any current developments in the industry.
Post GST, property prices are unlikely to change significantly. Key factors like location, quality of construction, amenities and builder credibility will still define the purchase of a property. Also, GST will not apply for ready-to-occupy homes.
If you haven’t yet purchased a property, doing so in the present scenario will be easier and safer than ever before. The increase in affordability is one of the reasons why you should consider buying a house instead of renting.
Explore a property with Baashyaam Constructions, a leading real estate developer in Chennai, known for its quality and on-time completion.