House, a place we stay in, a place we call home, the place that shelters us, is one of the basic requirements. People can’t just stop buying houses just because a 12% or 18% GST is being levied on it, this need is one that cannot be done away with and so this article aims to help all those homebuyers take a decision about the most feasible and easy on the pocket option for them.
Since after the roll out of GST, purchase of any developed plot or apartment attracts 12% GST, however, the purchase of a housing unit in a completed project, which has received occupation certificate (OC) or where registry can be done is exempt from GST.
However, if the OC has only been applied for, but has not been issued by the Authority the buyer will be subject to 12% GST of the total value of the apartment. Therefore, a project which has received OC is less expensive than the one that has not received the OC merely owing to the applicability of GST at 12%.
Once the developer receives the OC, he will be required to get the registry of the housing unit done however he will only be allowed to get it done if he has cleared all the dues against the project.
GST was introduced with the aim of reduction in prices by availing input tax credits and passing it on to the customer. So a developer whose project has been completed but has not received the OC yet, can avail tax credit of 2.40% of the cost by simply submitting the invoices and bills of the purchase inputs like cement, steel, etc. this credit will be paid out to the developer from the taxes that the buyer will pay for the final apartment.
However, this tax credit can be availed by developers only for the taxes paid by them after July 1 i.e. after the rollout of GST and also if the entire project was implemented after July 1st. According to the Govt. the benefits are shifted on to the consumer and it will result in reduced prices of a medium and affordable range of housing units.
On the other hand, prices of premium ranged housing units are expected to rise substantially.
A developer whose project was partially complete and under construction as on July 1, can claim tax credit as well however such tax credit can only be availed only on certain inputs and taxes paid after July 1thereby reducing the benefit being passed on to the developer to the consumers.