The impact of GST on real estate sector will be significant, but as a homebuyer or investor, should you fear? Some home buyers were thinking that the implication of GST bill will add more cost to home buying and the investors will have to pay more to buy properties. But as far as the cost of home buying is concerned, those investing in real estate or planning to buy property in Bangalore or suburbs should not fear. The GST bill is not going to become a burden for home buyers, and in fact, real estate sector will likely become more buyer-friendly than it was ever before.
We all know how RERA has changed the real estate market. If you are not aware about it, please go through our guide on the impact of RERA and how it is beneficial for investment in real estate. The additional tax which is said to come as a burden with GST is not going to trouble interested home buyers. Real estate is now partially under the GST and as a part of work contracts, the 12% tax will be applicable. Tax experts say that the impact of GST will be very neutral for home buyers and is not going to put them in any additional cost trouble.
Don’t believe everything your friends, amateur agents and real estate developer tell you. As far as the tax is concerned, there are only a few things which you need to look at when you are buying a house, be it luxury villa or villa plots in Bangalore. The excise duty, VAT and service tax are the most important factors that increase the cost, majorly for the real estate investors. They all come to a total of 9 to11% tax, which excludes the stamp duty, as it is a part of the state’s decision.
These all factors, excluding stamp duty will come under the GST bill as a part of the new indirect tax that allows input tax credit for real estate developers. The current effective taxation rate is already in the range of 9 to 11% and the proposed GST will bring 12% tax, which will is not expected to rise the home buying cost, say industry experts.
There is one more thing you must understand is the input credit is entirely allowed to the sector. It will persuade people to help reduce the cash component and help the economy.
At present, input taxes that include excise duty and central sales tax on construction materials are paid by the project developers and cannot be collected from the customers. So, there’s nothing to fear from because the market is becoming more transparent, promising and better than ever.
Overall, the GST implication is not going to lead customers to pay any additional cost and it will not turn out to be an additional burden for the viewpoint of home buyers.
The real estate sector is full of assumptions and rumours, but as a smart buyer, you need to find the best real estate developer in Bangalore to get the right investment opportunities in the promising neighborhoods such as Whitefield and Thanisandra which are consistently growing and many people are already reaping the benefits.