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What is the impact of GST on the Real estate?
What is GST?
The Goods and Services Tax, abbreviated GST, is a new tax that went into effect on July 1, 2017, and was implemented in India. This tax is applied at each level of the supply chain, including manufacturing, distribution, retail sale, and any other applicable stage. The Goods and Services Tax (GST) is chargeable on both the input and the output side of a transaction. The nature of a company's operations and the sector it operates in influence the GST rate that applies. The Goods and Services Tax (GST) rate varies from one state to the next and from city to city.
Where is GST charged?
The weightage of the products and services that are given is used to calculate the GST charge.
At every point along the supply chain, a GST is incurred.
Inputs that are used in the production of products and services are subject to the GST.
The final output of goods and services is subject to the GST tax.
The Goods and Services Tax (GST) is applied to all completed sales transactions.
GST and Real Estate
The sector of real estate is one of the most essential pillars around which the Indian economy is built. The real estate sector is responsible for between 6 and 8 percent of India's Gross Domestic Product (GDP), and it is second only to the information technology sector in terms of the number of jobs it creates.
Homebuyers in India are required to pay a Goods and Services Tax (GST) on the purchase of under-construction properties including flats, apartments, and bungalows at the rate of 1 percent for affordable housing and 5 percent for non-affordable housing. This tax is known as the Goods and Services Tax. When it comes to real estate, the Goods and Services Tax (GST) is applicable to the purchase of developable plots as well.
In India's megacities, individuals who buy flats and apartments in under-construction developments will also be required to pay GST on flat purchases beginning in 2022.
Take note that the Goods and Services Tax (GST) does not apply to the acquisition of completed apartments. A project is considered to be finished if it has been awarded a certificate of completion by an appropriate governing body.
Impact of GST on Real Estate
After the Goods and Services Tax was implemented, there was a drop in revenue, which was mostly ascribed to the demonetization of currency and the Real Estate Regulation and Development Act of 2016.
According to a survey by Liases Foras, housing prices across the country either remained the same or saw a very slight increase during the third quarter of 2018, while prices in major areas, such as Delhi NCR, were reported to have seen a fall of two percent over the same time period.
The report further states that the secondary market was also significantly affected, with prices reportedly falling by 15–20 percent in the Delhi–National Capital Region (NCR). Despite the fact that resale properties are exempt from GST, this remains the case.
