The biggest effect of GST on real estate is that it has streamlined tax processes and increased compliance. GST’s unified tax structure, input tax credit, and reduced cascading effect have made it easier for the industry people to cooperate.
By Admin | 
GST, or Goods and Services Tax, was introduced in India in 2024. It is a single tax applicable on products and services, replacing other taxes levied before 2017, including VAT and services taxes. GST was introduced in India to simplify the transaction process and to make it more transparent and efficient.
Like regular products and services, the real estate industry also levies GST on property purchase. However, one must note that only under-construction projects can charge GST. Besides this, ready-to-move-in and completed projects have no rights to apply GST.
In the real estate industry, Goods and Services Tax is implied on different types of property, including the sale of commercial properties, residential properties, or land.
If any developer or builder sells a project, which is under construction and yet to be completed, then the property applies GST at the time of selling. GST is calculated based on the percentage of the property’s value, construction charges, and other charges. The GST can vary for every type of property [commercial, residential, and land].
For all the projects that are completed and ready to be sold off, GST is not applicable. However, the buyer must still undergo several other charges, including stamp duty and registration fees. These charges are exempt from GST.
The developers and builders can anytime claim ITC for GST for the raw materials they use during the construction phase. ITC helps the developers & builders reduce double taxation, ultimately allowing them to minus the extra burden of charges.
Affordable housing in real estate levies less GST, therefore, capturing a large segment of homebuyers with lower budgets for investment.
In the usual scenario, renting and leasing of residential properties do not attract GST. But, in the case of commercial properties, a certain amount must be paid with the rent value.
All the services that fall under real estate transactions, agents’ fees, etc., are entirely subject to GST and may vary from each other.
GST’s impact on real estate construction materials is notable. With GST’s unified tax structure, input tax credit, and reduced cascading effect, the industry experienced streamlined tax processes and increased compliance. Builders could claim credits for taxes paid on raw materials, curbing costs. However, immediate pricing changes varied; some materials became cheaper due to input credit, while others saw slight hikes due to revised tax rates.
Here are the current GST charges applicable on different types of property in India in 2024.
Before registering for GST online, ensure that all documents are ready for a hassle-free process and smooth registration.
To apply for GST, one has to undergo the below-mentioned process.
To summarise the GST guide on real estate, one must acquaint oneself with the terminologies related to GST to prevent any surcharge and follow a streamlined process. Besides this, GST in India is subject to various changes depending on government rules. Hence, staying updated with this segment’s latest news is crucial.
Another significant suggestion before investing in any real estate property is to determine brand credibility. Ensure to do a background check and invest in reputed developers like Pharande Spaces and other leading ones in the industry.
The biggest effect of GST on real estate is that it has streamlined tax processes and increased compliance. GST’s unified tax structure, input tax credit, and reduced cascading effect have made it easier for the industry people to cooperate.
GST for real estate buyers may vary according to the property. If you go for affordable housing, then on average the GST rate is 1% without ITC, if you are buying luxury property then the GST rate can go up to 5% without ITC, however, usually there is zero GST on ready to move in properties and land purchase.
Under the GST regime, the buyer of the property is supposed to pay the GST for under construction buildings.
The GST on ready to move in property or land purchase is zero, whereas the GST on under-construction buildings may vary, it goes from 1% to 5% according to the type of the property if it’s affordable or luxury.
A refund can be claimed by any unregistered person when they have paid GST to the builder against the receipt of the construction service. Even if the contract has been terminated in the future, the refund can be claimed by the buyer, however, the time limit to issue a credit note has been lapsed on the date of termination.
By Admin