DAINIK NATION BUREAU
A 33 years- old IT Professional Sandeep Gupta has been planning to buy a new house in Delhi. For this he had visited several under-construction projects’ site and had interacted with the several developers too. Eventually he was not fully convinced whether buying a new house would be a good idea to him. Although buying a property will be a dream come true for him but he is worried about few things. For the beginner, now GST has been rolled out, is it wise decision to make investment in a property after July?
Sandeep’s dilemma is a reflection of what most of buyers have been going through for the past few months. Demonetization had set the property price crashing. Now GST is being advertised as the biggest indirect tax reform in independent India but in reality no one is certain whether this will be good for the real estate. There are few indicators that forecast advantages for home buyers but few factors put tension too.
GST on under construction and newly constructed properties, which are yet to receive the completion certificate (CC) is 12%, which is more than the 4.5 percent service tax that was applicable earlier. A CC is an official document that is being issued by local planning authority after completion of construction.
Will it inflate price of property? Then answer is NO because GST will incorporate six existing taxes including the likes of raw material and excise, entry tax and VAT which is often more than 12 percent. Although ready to move-in property does not come under GST regime. It has created a notion that buyer will prefer to buy new property.
Currently a home buyer pays almost 11 percent in indirect taxes. For instance, VAT on the construction materials ranges from 12-14%. This will be now replaced with 12% GST. The cumulative tax being paid by the customer at the time of purchase of property. Under the GST regime customer would be real beneficiary.