Now the confusion around the Goods and Services Tax (GST) and its impact on the real estate market is fading away. But the big question – how GST affected property prices in Bangalore and other places in India remains to be answered. Every market in the real estate world is different and as a result, the rise and fall cannot be measured on all the parameters. If you’ve seen a property or willing to know whether the property rates are going up or down due to GST, you need to know about a few things to understand the real impact of GST in real estate sector.
Since July 1, 2017, GST has been in effect and homebuyers are worried. The problem with the bill is that there was always a confusion about how it will affect the market. The nation from 2015 has seen many policies that directly and indirectly made a huge impact on the real estate sector. As a result, no clarity was around the government’s policies and buyers were just waiting for the answers to their most important questions. Read on to see what home buyers should know.
The overall impact of GST on home buyers depends on the money they are planning to invest. With GST, the change in the price of properties is based on different housing segments. Those willing to go for affordable housing schemes, the price has come down as the government is getting benefits due to transparency in the real estate market.
Another change in the real estate sector that affects pricing is the qualification of the real estate developers. To bring transparency in the entire homebuying system, the GST bill requires the contractors and builders to be more educated about the industry. Practically this is a good approach because those who wish to remain in the system will have to educate themselves about the home buying and selling process.
The GST is levied on unfinished projects and under construction properties. So in case if you have already purchased a property after July 1, you won’t be charged additionally if the developer has obtained the completion certificate from the GST Council.
There is an anti-profiteering clause in the GST that ensure that the benefits the real estate developers get after the tax should be passed on to the home buyers. The developers, however, can avail the tax on construction in form of input credit tax, which is a small part of the total price of the property. Because of the change, the property prices will likely go down for some real estate projects.
Based on the property price, the impact of GST in real estate is positive in many ways. As far as the property price is concerned, the higher price you pay for a property means that the prices will likely go up. One thing homebuyers must understand is that the real estate developers they are buying a property from must be registered under RERA.
The government’s new policies not only require the sellers to educate themselves, in fact, the home buyers should also learn the basics from professional real estate developers and agents.