Impact of GST on Real Estate
New GST rates have come into effect for residential real estate right from the 1 st of April 2019. The GST is to be charged at 5% without Input Tax Credit (ITC) on residential properties that are not part of the affordable housing segment and at 1% without ITC on residential properties that are included in the affordable housing segment. For under-construction properties 12% GST is to be charged while it does not apply to the sale of completed properties (where completion certificate has been issued) or to the resale of old properties. Under GST, construction costs are significantly reduced for the developer as multiple taxes are not there and due to the availability of input tax credit. A reduction in the cost of logistics will be an added benefit. Hence developers may see improvement in margins. Builders receive an input tax credit on the materials purchased from suppliers/contractors and under the current GST structure pass it on for the home buyers to profit. As this has no...