Sunday, 9 April 2017

Impact of GST on Home Buyers and Renters in India

Impact of GST on Home Buyers and Renters in India

The Lower House of Parliament of India has cleared four bills in planning of the upcoming roll out of the Goods and Services Tax (GST) administration: Integrated GST, Union Territory GST, Central GST, and Compensation Bill.

This sets the stage for states to authorize laws and actualize the new tax system from July. The duty rates applicable on items and services are relied upon to be declared by the legislature by April-end. Therefore, once GST becomes effective from July, the leasing of land and buildings - and home loan EMIs paid by the individuals who buy under-development flats - will pull in the appropriate duty rate. Depending upon the tax rate that gets reported for land, the impact could be higher or lower than today.

Industry Expectations

The industry experts hopes that a lower tax rate of 12% on under-construction real estate projects will help diminish the cost of homes and increase affordability for end-users. However, a higher rate of 18 per cent will make under-construction apartments more expensive for buyers, making it difficult for them to invest in residential projects.

Impact of Central GST on Affordable Housing

After implementation of Goods and Services Tax, leasing of land and buildings, as well as EMIs paid on the home loan taken for purchasing an under-construction housing unit, will attract tax. Needless to say, the impact of this new tax on real estate market can be guessed only after the declaration of the tax rate.

Experts believe that input credit allowance will bring down the cost for builders, directly affecting the overall price of a property. If builders transfer the benefit to the clients, home buyers in India will be able to save up to 20 per cent. Though GST will make property expensive for the end-users due to increased rate of taxes, they can still get benefited from it, if builder pass on the reduced cost to them.

Given the Government's objective of 'Housing for All by 2022', this exception is probably going to proceed under the new tax regime. Ministry of Housing and Urban Poverty Alleviation (MHUPA) has also asked for the states and union regions to consider waiver or defense of stamp obligation on moderate lodging ventures.

1 comment:

  1. I think, this is really very well and informative content given about Impact of GST on Home Buyers and Renters in India. Thanks for given this information here about this blog.3bhk Flats in Dwarka Sector-7