In recent months, the GST council addressed concerns related to builders’ inventory of under construction properties. Builders were given an option of either choosing the existing higher tax rate with input tax credit (ITC) or the new flat rate which took effect from April this year. The existing GST on under construction flats, as of March, was 12%. According to the new GST rate on real estate, the builder gets to choose whether to keep the existing tax rate and with ITC benefit OR accept the new rate of 5% without ITC benefit.
However, effective 1 April, new projects will have to accept the new GST rates of 5%, and 1% on affordable projects. There is no ITC benefit available for them.
Essentially, the builders can go for the most beneficial option to keep the liabilities low and tax credits intact. However, a condition was imposed that 80% procurement of raw materials and services by developers should be from registered dealers, to avail the new GST scheme. If the purchases done do not comply with these new norms, an 18 per cent tax would be levied upon the builder. Additionally, the tax on cement purchased from an unregistered dealer shall attract a tax of 28 per cent.
In the current market scenario, there is sufficient supply of ready to move homes. Customers benefit significantly by opting for projects with Occupancy Certificate. This minimizes completion/handover delays and Pre EMI-Interest costs. OC received projects do not attract GST which can result in further savings.
Now is the perfect time to buy a premium home at
Windchimes by Mahindra Lifespaces, Bangalore. The project has received OC and due for delivery by December 2019. The project is developed in prime location close to IIMB, Bannerghatta Road and offers spacious 3 & 4 BHKs. The project offers more than 80% open spaces, high end specification and lifestyle amenities. The project is Platinum Pre certified by the Indian Green Building Council.
Reference:
1. Livemint - GST on real estate GST council allows builders to choose between 2 tax rates
2. Business Standard - Homes to get cheaper as GST on under construction properties slashed
3. Housing - GST real estate will impact home buyers industry
4. Freepik.com/free-photo/hands-working-with-office-items_1276373.htm
