What Is The Impact Of GST Bill On Stamp Duty And Registration Charges?

What is the Impact of GST Bill on stamp duty and registration charges
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09:34 AM 08 May 2019

The real estate market is one of the most emerging sectors of the Indian economy. After the agriculture, real estate sector plays an essential role in contributing an average of 5 to 6% Gross Domestic Product (GDP). It is expected to increase a CAGR (Compounded Annual growth rate at 30 per cent over the next ten years.

Do you aware of GST Bill on stamp duty and registration charges of property. Do you plan to buy a house in Hyderabad in future, then you need to know information about the GST on real estate and how the taxes collected earlier were different from GST.

Buying a property is one of the major decisions made by a buyer. So buy the perfect home and ensure to complete all the documentation in the property transaction.  Especially for property registration and stamp duty.

Property registration ensures your ownership to the property and stamp duty is a major part for registration for your property. Registering the property with your name helps you get the legal right towards the property and will also help you avoid disputes related to the purchased property in future.

Let us know in brief about the GST and its impact on Stamp duty and registration charges.

About Goods and Service Tax (GST)

Goods and Service Tax (GST) is an indirect tax on goods and services sales in India.  Whenever there is a new production process, the GST is imposed on it. However, it is refunded to the final consumer.

The goods and services tax slabs are collected in 5 types include 0%, 5%, 12%, 18% and 28%. It will cover the Central Excise, Service Tax, Value Added Tax (VAT) and other local taxes to create a stable market. Also, it is expected to increase GDP growth by about 2%. There are three types of GST taxes are collected include Central GST (CGST), State GST (SGST) and Integrated GST (IGST).

What is the GST impact on real estate?

At present GST on real estate is 12 per cent. All under-construction properties will have a GST of 12 per cent, and for ready-to-move properties, GST is not applicable.

Stamp Duty and Registration Charges

Stamp Duty & Registration charges are different from one state to another. However, Stamp duty charges vary between 4 to 10 per cent, and registration charges range from 0.5 to 1 per cent on the value of the property.

About Stamp Duty

Stamp duty is a tax that is charged on property transactions by State Government. Every buyer has to pay the stamp duty at the time of property registration. The amount of stamp duty varies from one state to another based on the transaction type.

It is essential to know that the stamp duty is added to the price of the property. If the stamp duty charges are not paid in time, then every month 2 per cent penalty is added. This penalty can reach a maximum of 200 per cent of actual stamp duty charges.

Stamp Duty Charges in Hyderabad

Stamp duty of apartment/ flat is 4%, transfer duty is 1.5%, and the registration fee is 0.5% of the higher of the two, market value or consideration of the property. However, the charges vary from state to state according to the property type.

About Registration of Property

Property registration involves a process of registering the documents related to your property. If you purchase a property, the registration of the property is compulsory. It helps to avoid future disputes. It ensures you are the actual owner of the property. In the property registration process, you have to pay stamp duty, transaction duty and registration charges. Also, when you buy a property which is transferred by two parties for the second time, you will have to pay registration charges.

The state government collects the registration fee and stamp duty. The registration of the property is done at the sub-registrar office in the particular area where the property is located. The registration process involves an electronic method to promote fair transactions in the real estate sector.

Impact of GST on Stamp Duty and Property Registration

Registration and Stamp Duty on real estate is continued same in place as state government taxes subsequent to GST. The Registration and Stamp Duty charges differ from one state to another. In the GST, the stamp duty and registration charges will be applicable in case of both ready to move and under construction properties across India, whereas GST will be applicable only to under construction properties being sold. Generally, Stamp duty on properties in Hyderabad is 4%, and the registration fee is 0.5%.

Benefits of GST Bill

  • The GST tax now simplifies the earlier complicated tax structure.
  • Input tax credits help the builders by reducing costs.
  • Properties for sale at a fair price for the buyer due to GST rate reduction to one per cent on residential properties in the affordable housing segment.
  • The input tax credit will benefit the buyer by paying GST on the less amount.
  • The stamp duty will be applicable and will remain unchanged for all type of properties.

Are you interested to know more trending real estate news? Visit Property Adviser, the first ever real estate property directory for more property details and know about the latest news and articles related to Hyderabad’s real estate sector.

By: Shailaja K