Gst rate on underconstruction property

Before you think how it affects the value of an under-construction property, consider this. Earlier, you had to pay service tax and VAT. Currently, the Goods and Services Tax (GST) is levied at per cent with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats, where the completion certificate is not issued at the time of sale. The Goods and Services Tax (GST) Council on February had slashed tax rate on under-construction residential properties, making the effective tax rate percent for the normal category and 1. Likewise, other sectors, this comprehensive and multistage tax system has affected the real estate sector to a greater extent. These taxes had a cascading effect, making the property cost go up.

GST has been introduced. Land is an immoveable property and as such exempt from tax. Builders can claim full ITC. There is no service tax or VAT on the ready move in property.

The council that laid out transition rules for the implementation of new tax rates for the sector has decided that builders will get a one-time option. Regardless of how much or how little such a rate cut will actually do to revive the market, all stakeholders – from industry players to buyers. The Council also reduced the rate of affordable housing from to a reduction of. Central Tax ( Rate ) ,dt. But one-third of this percent is deemed as the value of land or undivided share of land supplied to the buyer of the property.

For affordable housing units, the existing tax rate is per cent. One-third value of the property is considered as the cost of land. Thus, ideally, it should not lead to an increase in the cost to the buyers. A property that is under construction is governed by the works contract. Real estate experts say that stamp duty and property taxes may continue to be levied on immovable properties.

However, one-thirds of the value of the consideration was presumed to be the value toward cost of the lan in cases where the interest in the land is also supposed to be transferred. Under-construction properties. This change is expected to bring about a reduction in cost of housing for prospective buyers. The government has cut the Goods and Services Tax rate on under-construction estate properties to from for affordable housing, and to from on non-affordable housing projects.

As said by Sushil Modi, FM, Bihar. Further, in terms of ongoing projects, the Council allowed developers to choose between the old rate of and new rates by May 20. For tax purposes, the process of buying an under-construction property was seen as buying a service from a builder.

But if the rate is fixed at , the rise would be by around. The problem got compounded as stamp duty, which is levied by the local state government on the registration of the property , has not been subsumed in GST. When Get was introduce it was at an effective rate of. However the government also provided input tax credits(ITC) on purchases made by the developer. It is levied on the supply of goods and services.

For under construction properties, a buyer has to pay effective GST. The Finance Minister stated that this move will make housing more affordable to the aspirational class, neo-middle class and middle class. However, builders are not passing on the input tax credit (ITC) benefit to consumers. Along with the stamp duty and the registration fee of 7. But the service tax rate was only 4. Gst on under construction property.

Start a discussion Unanswered. This is regardless of whether the property under construction is a residential or non-residential property.