The price of flats may fall due to the implementation of goods and services tax (GST) in India. The possibility of price drop came up after the centre and states mutually agreed to fix the goods and services tax at 12% for completed housing projects and apartments.
The implementation of GST will lower the burden of homebuyers by reducing the actual prices of apartments. For example, the price of a Rs. 1 crore apartment may drop by 3/5 lakhs once the new tax rule is implemented. Also, homebuyers will stop paying the existing service tax of 4.5% on property which they have to pay on the final price of a home at the time of possession.
It is expected that the net prices of affordable houses which cost up to Rs. 30 lakhs shall drop by 5% following the implementation of GST.
According to realtors and tax consultants, the fixing of goods and services tax at 12% is a customer friendly initiative by the government that would reduce the tax liabilities of homebuyers.
As reported by The Times of India, Geetambar Anand, the chairman of Credai and CMD of ATS Infrastructure said “at 12% GST, customers will benefit from projects that cost up to Rs 6,000 per sq ft”.
According to a Crisil Report, following GST, steel and cement will be taxed at 18% and 28% respectively, and other materials such as white goods and paints will be taxed at 28%. However, the final and finished house will be taxed at 12%.
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