Homebuyers will be paying a uniform rate on their purchases under the Goods and Services Tax (GST) regime that will bring down the cost of their purchase. A buyer will now have to pay 12 per cent GST for buying a home. Under the outgoing regime, buyers of under-construction properties had to pay multiple taxes, including service tax and value-added tax, which made the purchases comparatively expensive.
"The real estate sector was heavily taxed, and we welcome a single stable 12 per cent GST rate, inclusive of the value of land and with full input tax credits. We are of the view that the actual tax impact under GST would equal or would be lower than the existing multiple indirect taxes on the sector.
However, much clarity is needed on whether or not affordable housing will become more affordable under the current regime. "There are few things where we are still waiting for clarity such as whether affordable housing will remain out of the ambit of the GST or not.
However, while the pricing of houses is going to dip down, staying in them is likely to get costlier under the new regime. Owners of flats will have to pay 18 per cent GST on MAINTENANCE CHARGES. The existing rate at which maintenance charges are taxed stands at 15.55 percent. This included 15 per cent service tax, 0.5 percent Swachh Bharat tax, and 0.05 percent non-agriculture tax. In effect, the change in rates will amount to an additional burden of 2.5 percent on homeowners.
The tax is applicable to property owners paying over Rs 5,000 as maintenance charges. This, however, does not include utility bills or property tax or STAMP DUTY. Similarly, housing societies that collect maintenance charges from flat owners and the ones that have an annual balance of over than Rs 20 lakh will have to pay these charges. In this case, too, utility bills, stamp duty, and property tax would not be counted.