If you are planning to buy an apartment, then you have to pay tax on it. To explain it in simple terms, you have to pay goods and services tax (GST) when you are buying an apartment. The GST came into operation in the year 2017 and it has had an impact on the real estate market. In this article, we will explain to you the impact of GST when you are investing in a prestigious project like the Sudarshan Amrit Homes.
To understand the impact of GST on real estate, you have to know what was the scenario before GST was implemented.
Situation before GST was launched
Before the GST was launched, you have to pay a multitude of state and central taxes for buying an apartment. All these taxes have a cumulative effect and they increased the construction costs. Furthermore, the developers did not have any option for credit against these taxes. Some of the taxes that a developer has to pay to include the following:
- Value-added tax (VAT).
- Entry tax.
- Central Excise.
- Octroi.
- LBT.
- Service tax.
As the builders have to pay all these taxes, they passed them on to the homebuyers.
After GST was implemented
GST is India’s biggest tax reform and this single tax has subsumed many indirect taxes. The advantage of GST is that it offers uniformity to the taxpayer. At the initial stage, the taxes for real estate were at a higher rate, but later on, this rate was slashed to ensure that the dream of making houses for all in the year 2022 is achieved.
What are some of the taxes that are subsumed by GST?
GST subsumed many taxes some of which include the following.
- Excise duty.
- Custom duty.
- Service tax.
- Special additional duty of Customs.
- Central sales tax and more.
What is the current status of the GST rate on real estate?
At present GST rate for affordable housing is 1% without ITC (input tax credit). However, if you want to buy an apartment in a market project like the Advitya homes then you have to pay a GST of 5% without ITC.