The introduction of GST had a direct or indirect effect on everyone. There’s also a significant effect of GST for Homebuyers. This article discusses everything that you must know about GST for Home Buyers in India.
How does the GST affect homebuyers?
GST has had a profound impact on the Indian economy, and the real estate sector has been one of the key beneficiaries. The GST implementation has resulted in a reduction in the overall tax that was a burden on home buyers, making properties more affordable. In addition, the input tax credit system under GST has made it easier for builders to pass on the benefits of tax savings to buyers. This has further helped to boost demand for residential properties across the country.
What tax reduction can you get by buying a house/residence?
There is no specific answer to this question since it depends on a number of factors, such as the individual’s tax bracket, the type of house purchased, and whether or not the house is used for business purposes. However, in general, one can expect to receive a tax reduction of anywhere from 5 to 30 percent on the purchase of a house in India.
What are the GST benefits for Homebuyers?
The GST has been a boon for house buyers in India, as it has led to a reduction in the price of construction materials and other inputs. This has resulted in a reduction in the price of new houses by an average of 5-10%. The GST benefit for homebuyers is expected to increase in 2022 as the standard GST rate is expected to be reduced to 12%. This will result in a further reduction in the price of new houses by 5-10%.
The conditions to avail GST benefit for house buyers are as follows:
- The buyer must be an Indian citizen.
- The buyer must purchase the house for personal use and not for investment purposes.
- The buyer must not have availed of any other benefits under any housing scheme.
- The benefit can be availed only once per family.
- The buyer must have a valid PAN card.
High Court Decision on GST for Under Construction apartments/homes
The High Court in the state Gujarat recently Stated in their verdict that GST will not be applicable on under-construction flats, which will reduce the tax outgo for buyers. This is a significant decision as it will provide relief to many buyers who are struggling to pay the high GST rates on under-construction flats. The court ruled that the GST exemption on under-construction flats will apply from the date of the contract, which means that buyers will only have to pay GST on the value of the flat after the contract is signed. This will reduce the overall cost of the flat and make it more affordable for buyers.
As it is known to all there are certain benefits that are being offered to the home buyers under the Goods and Service Tax (GST). Now the home buyers can avail benefits which include a tax rebate of up to Rs. 50,000. Also, the buyers will be able to deduct the interest on housing loans from taxes.
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