The year 2017 had seen its ups and downs with the advent of demonetization itself. Before even, we saw the face of stability, sales, and launch of new homes went down because of more focus on under construction projects by the developers. The real estate saw a further downfall when the government introduced a 12% GST on under construction real estate projects along with other goods and services. However, the only ray of hope was seen when the leading developers increased their market share every 3 months and developers and investors from Mumbai and Pune contributed more than 45% on demand and supply of the whole country. The GST has had its impact on all sectors and here we discuss how it can affect your dream of moving into a new home.
Ready properties for sale can wave off the GST only if the OC for the project has been established. According to a report from CRISIL, excise duty and VAT paid by a developer was different for every state. This disparity has been sorted out by imposing 28% and 18% GST on cement and steel and 28% on paint and other white goods. This has led to 12% tax on the final product. The tax amount applicable to the land and the entire cost is 12% which makes it easier for the developers to avail the input credit. The home buyers are thus relieved of the GST liability.
However, the developer has to pay the GST on the complete project and the input credit is only claimed on the construction cost. This causes a gap of 30% which the builder in order to bridge will raise the price of the property whether or not you choose to buy a ready-to-move-in or an under construction property.
The ‘Housing For All By 2022’ venture by the Government targets at delivering 10 million houses out of which 95% is to be constructed for Economically Weaker Sections (EWS) and Lower Income Groups (LIG). People are expecting lowered tax rates from 18% to 12% GST on property purchase with abatement for land raised to 50% hence bringing down the tax rates to further 6% GST. This program can prove of huge advantage to the actual cause of the project by the year 2022. For those looking forward to purchasing new residential projects in Kolkata, can hope for a better scope in the coming 2 years.