a brief gst guide

Realty Plus - - Policy -

• 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.

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