From the very moment the Indian FM Arun Jaitley hinted on launching a new, less-complex tax structure to replace the existing one – the real-estate developers, property dealers etc. started contemplating the possible impacts of GST in the property prices. Even when GST was actually launched, the real-estate sector had high expectations even though they weren’t actually sure if the new tax structure will be in their favor or against them.
Thankfully, a few months after the GST was announced and people began to understand the ins and outs of the policy, it turned out GST was actually in favor of the real-estate sector. Neither the home buyer nor the sellers will have to pay additional charges owing to GST. The total charges paid (other than the cost of the property) while buying or selling a property will remain the same except all the indirect charges will be combined into one.
Now, to understand the impact of GST on the Real-estate sector, let’s talk about the prevailing taxes paid by the home buyer and the property dealer while a [property transfer happens. Accordingly, Under the current tax regime, the taxes are paid by the real estate developers include:
- Service tax [ST]
- Values added tax [VAT] and / or Central sales tax [CST]
- Excise duty
With the implementation of GST, all these taxes will no longer be applicable and the developers will have to pay only one tax – Goods and Services Tax [GST] which would be around 12%, almost equivalent to the gross sum of all the charges levied per the previous tax system.
Additional Read: How to Choose the Best Home Loan Scheme for Yourself?