Real Estate market in India has finally witnessed the much-awaited GST reduction for under construction projects with the latest reforms from the government in place!
If you’re here, you must be keen to know what all changes have these reforms brought and how it will reduce the burden off your pockets. We at Aspire Proptech love to keep the aspiring home buyers well-informed with the latest happenings in the sector.
Wondering if these changes will help you in getting closer to your much-awaited dream home in Bangalore? Well, we have all the answers for you.
Highlights from the latest news about GST:
To enhance the demand in the real estate sector, the GST council on 24th February 2019 slashed the tax-rates for under-construction apartments to 5 percent and affordable homes to 1 percent, effective from 1st April 2019.
“This will be a major step in our efforts to give 'boom' to the real estate sector and making housing affordable for the middle class, neo-middle class, and aspirational class", Finance Minister Arun Jaitley stated after GST council meeting.
Ready to Move Residential Properties remains at Zero GST
The latest GST reform has no impact on ready to move residential properties and they stand to be free from GST i.e. Zero GST is applicable across these properties. As a buyer, you can seek out for ready to move properties as you don’t have to pay any tax on your purchase.
Under Construction Properties: The Big Change
Prior to 1st April 2019, GST was applicable on under construction properties (not falling under affordable housing) at 12% but now it has been revised to 5%. This step has been taken to make the entire real estate market more customer friendly and to generate more demand for the heaps of inventory which is being added.
Let’s take an example for a better understanding of the benefit of this rate change:
Just assume that you have to purchase a 1000 ft2 apartment which is priced at Rs. 5000/ft2, the sale value comes up to Rs. 50 lacs (Rs. 5000*1000 ft2). Earlier you would end up paying Rs. 6 lacs in GST at 12%, however, with the rate modification, you’ll have to pay just Rs. 2.5 Lacs for GST, which saves you Rs 3.5 Lacs on the same apartment!
Under Construction Affordable Properties made accessible for all
GST council has revised the rates for affordable homes which were earlier taxed at 8%. From 1st April 2019 onwards, affordable homes will be taxed at 1%. Affordable houses have been defined under the act as residential properties which are having area lesser than 60 mt2 i.e. 645 ft2 and costing less than Rs. 45 lakhs.
This change makes the affordable homes fall within reach for everyone and housing for all. This is a welcome move by the government as it will benefit the economically weaker sector of society.
The government has also encouraged builders across India to come up with more affordable housing projects which are targeted to ensure that all the citizens have their own homes.
GST reforms: what difference will it really make?
The reduction in GST rates for real estate sector is bound to benefit the home buyers as they will be paying a much lesser amount for the purchase of under-construction properties. Because of earlier GST regime, maximum buyers were preferring to go for ready to move properties as they were tax-free, but now with these changes in place encourage buyers to invest in under construction properties as well.
Affordable housing brings huge hopes for the real estate market as this category holds high demand and low supply at present. With GST rate made close to nil, this is happy news for aspiring home buyers falling under low-income group as they can now access their much-awaited dream home.
2019: the prime time for investing
With these positive changes in place, the realty sector has become highly buyer-centric and this makes 2019 the ideal time for investing for all aspiring home buyers.
Still waiting to purchase your dream home? Now is the right time. If you would like to get any assistance relating to home buying, feel free to reach out to us. Our team is constantly dedicated to ensuring that we get you and your loved ones into beautiful living spaces!