A possible GST rate cut at the beginning of 2020 will surely bring in much-needed rise for the Indian residential sector like Flats in Lucknow, Villas in Lucknow, affordable houses in Lucknow and many more in the list. The 33rd GST Council Meeting as proposed new GST rates on residential real estate transactions, which are as follows –
GST to be charged at 5% without Input Tax Credit (ITC) on residential properties that are not included in the affordable housing segment.
GST to be charged at 1% without ITC on residential properties like Apartments in Lucknow, 2bhk and 3bhk flats in Lucknow, 3bhk and 4bhk flats in Lucknow and many more that are included in the affordable houses.
GST on real estate in the case of under-construction properties is 12%.GST does not apply to the sale of completed properties or the resale of old properties. Builders receive an input tax credit on the materials purchased from contractors and under the current GST structure and thus pass it on to homebuyers. The result is – there may be changes in the GST regime concerning real estate in the future.
Real Estate has been an upcoming investment choice for many Indians and the sector has been driven to a large extent through investments made in the residential property segment. In Lucknow, the preferred desires among the buyers are theflats under 30 lakhs in Lucknow, flats under 50 lakhs in Lucknow, Villas in Lucknow, Luxury flats in Lucknow and affordable houses in Lucknowaccording to the relevant budget criteria.
A report from CREDAI (Confederation of Real Estate Developers Associations of India) has estimated that housing sector investments in India amounted to Rs. 59,000 crore and further investments will account for approximately 47%.
Multiple taxes were applied to real estate namely VAT, stamp duty charges, registration charges and service tax each of them featured different rates and also varied from one state to another. Implementation of GST on real estate has played a vital role in simplifying the taxation of Real Estate in India and can range from 5% to 18% depending upon some key factors.
- The Benefits of the GST rate cut on Residential Properties.
- A simple tax structure that leads to greater compliance from builders.
- The problem of ITC benefits not getting passed to property buyers is removed. Due to which, the interest of buyers gets protected.
- Better pricing of residential properties.
- GST does not apply to the following construction-related transactions and activities
- Sale of ready to move in flats
- Resale of property
- Sale/purchase of land
In all the above cases, the sale-purchase activity does not include the supply of goods or services as per the GST Act, hence no GST applies to these transactions.
Impact of GST on Real Estate
The resale market was also severely hit with prices reportedly by 15% to 20% in Delhi NCR. GST does not apply to resale properties, therefore one might conclude that the impact of GST cannot be accurately mentioned easily but a clearer picture can emerge regarding the impact of GST on real estate.
On a brighter note, as per the best real estate consultants and analysts, 2020 promises to be a better year for the Indian real estate industry as demand for both commercial and residential real estate is expected to virtually increase.
The investors or buyers can now easily invest without having a second thought on Lucknow and other surrounding cities for their desirable homes – Flats above 1cr, flats under 1Cr, Luxury flats in Lucknow, 4bhk flats in Lucknow, ensuring that all these areLDA approved flats in Lucknow.