GST Impact on Real Estate: From Buyers to Developers

The builder currently pays 4.5 percent service tax on the construction. Builders currently make 5 percent tax on bricks and sand. Apart from this, 12 to 28 percent tax is charged on all other building materials such as tiles, plaster, cement and marble. Apart from this, the state also receives entry tax. Overall, if the GST is implemented, the burden on the builder will be reduced.

Lower the tax burden, property prices are expected to be lower. If this happens then this step will prove to be a game changer for the real estate sector. Real estate regulator CREDAI has said that the benefits will be borne by providing input credit tax to Developers Byers. By which, buyers along with developers in the real estate sector will also benefit.

Home Prices may Fall by 3-4%

Low tax burden will reduce the cost of construction, which will be benefited by home buyers. Home prices may fall by 3-4% in a few months. Challenges The benefits of tax reduction will be whether the developers will pass-out to home buyers. If not, then the government will have to act under profiteering.

GST will be Game Changer

The government has decided not to include the price of land in GST which is on construction projects. The government has increased GST from 12 to 18% on the construction project. Removal of land value from the under construction project will reduce the impact of GST as 60 to 70% of the project cost is of land value. Obviously, if GST's burden is low, then it will also benefit the buyers. Cannot say how much the price will be.

Lower the tax burden, property prices are expected to be lower. If this happens then this step will prove to be a game changer for the real estate sector.