GST Impact on Real estate
Finally, the long-awaited tax reformation in India – Goods and Service Tax, GST in short has cleared all hurdles and have received all required government approvals. This single indirect tax will cover all other taxes on goods & services and will surge the overall tax collection for the government. There are different tax slabs for different industries, services and goods (items). Real estate industry will be under 12%* slab.
So, how will GST impact on Real Estate ?
To answer this question first let’s understand the current tax structure for the property. Currently, there are three types of taxes applicable in a property transaction –
- Services tax – Including Swachh Bharat Cess and Krishi Kalyan Cess total 15% tax is applicable on the total agreement value. There is additional 1% TDS (Tax Deducted at Source) applies if total property cost is more than 50 lac rupees.
- Stamp duty – There are different rates for stamp duties for different states (sometimes it is different in two cities within same state). This is outside of GST hence there will be no impact on this.
- VAT – This is not applicable in all states, but only within few states VAT has been charged on property transactions. With GST VAT will be go away henceforth it will reduce the tax burden on home buyers.
GST will have positive impact on Real Estate–
Considering the above points, we can predict that GST implementation will have positive impact on Real estate. Above given facts clearly shows that with GST overall tax burden will be reduced which will be more buyer friendly. Along with RERA (Real Estate Regulatory Act) implementation by 1st May 2017 GST will boost up the Real estate sector. GST will surely free home buyers and investors from paying several state level taxes.
1st July 2017 is the proposed date for GST implementation, so Real state sector is eagerly waiting for this date and positive enough that Real estate sector will boom.