GST impact on home buyers
While the previous blog was about important checks before buying a flat, this is about the impact of GST on home buyers who want to buy an under construction flat.
The GST regime is very favourable for home buyers to buy flats. Under the earlier tax regime, home buyers had to pay VAT, Service tax, Registration charges & Stamp duty on purchase of properties, which are under construction. Also, since VAT, Registration charges & Stamp duty were state levies, prices of properties varied from state to state.
Under GST, there is only one single tax rate of 5% applicable on properties under construction. For completed or ready to sale properties, GST is not applicable, and was not the case in previous tax laws. Hence buyers will benefit from reduction of prices under GST.
Protech Group with its numerous properties, have both under construction and Ready To Move flats in Guwahati. It will be favourable for you to decide on a home purchase in the current GST regime and tax rates.
Price Comparison: Pre GST Vs. Post GST
PRICE COMPARISON | |||
Pre GST | Post GST | ||
Price of flat (INR Lacs) | 50 | Price of flat (INR Lacs) | 50 |
VAT (1 to 4%) | 4% | GST | 5% |
Service Tax | 4.5% | ||
Registration charges (0.5 to1) | 1% | ||
Stamp duty charges (5 to 7) | 7% | ||
Customer pays (INR Lacs) | 58.25 | Customer pays (INR Lacs) | 52.5 |
Brokerage firm Knight Frank estimates that the reduction in GST has potentially reduced the buyers’ payout by 4-6 percent on the overall purchase, depending on the category (affordable & non affordable properties). The buyer gets to buy property at cheaper rate and those who have already booked an under construction property will get benefit of GST on balance payment. Therefore, one can comprehend that GST has impacted home buyers favourably.
It is important to note here that the increase or decrease in property prices depends on the cost of construction. Therefore, where the cost of construction is more than 35% of the value of the flat, the prices are likely to go up whereas for projects where the cost of construction is less than 35% of the value of flat, the prices are likely to reduce.
Under construction flat becomes more attractive option to buy than Ready To Move in flats after reduction in GST rates
The advantage of a difference in prices, in buying an under-construction unit to a ready-to-move-in one, is around 5%. Generally, the price at the time of pre-launch or during the earlier phases of the construction period is much lower, as compared to the period nearing completion or for a completed building. Hence, it may be lucrative for the buyer to opt for under-construction property.
Our current under construction project called Protech Galaxy is at Bhetapara, Guwahati. It has two blocks of flats namely, Aries and Nova.
There are only 12 flats left in the project: 2 BHK – 3 flats; 3 BHK – 8 flats; and 4 BHK – 1 flat. You may click on the link below and fill up the form for a site visit.
Form Link: Click here to fill the form.
You may also visit our website to know about our past projects and experience. Click here for website.