a brief gst guide
• GST for the real estate sector is set at 12 per cent with full input tax credit. The services approved by the GST council include those involved in “construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly.” This means that all under-construction properties will be subject to a GST of 12 per cent. But since properties are at various stages of construction, there exists some confusion about the GST variations on them.
• The actual rate of GST on underconstruction properties is 18 per cent. But since one-third of this is considered as the land value, those buying will be paying a reduced rate of 12 per cent with full input tax credit.
• Those who have bought a property after the builder received a completion certificate will not have to pay GST since no transfer or supply of goods and services has taken place.
• In the case of resale properties, since they are categorized as ready-to-move-in properties, there will no GST tax applicable.
• Property buyers who have paid in part or full before GST became a law will not be required to pay GST. But they will be charged applicable service tax rate of 4.5 per cent.
• GST rates on houses purchased under the Credit-linked Subsidy Scheme (CLSS) will be 8 per cent. CLSS is aimed at providing affordable housing to the lower and weaker sections of society.
• For property buyers, all the indirect taxes formerly paid during the construction of a property have come under GST, resulting in a reduced property cost. This could provide an impetus to property sales.