GST to make under-construction flats costlier by as much as 10%
Advertisement
Advertisement
With the implementation of However, it will not impact the prices of completed apartments and in case the flat has been bought but the entire payment is yet to be done, GST rate (from 12 t0 18%) will be charged on the remaining amount.
Also read: GST could make air tickets costlier
As of now, under-construction apartments are treated as work contracts, so in order to tax its services portion only, an abatement of 60% of the total cost is allowed. Therefore, the net service tax liability is calculated at 6% of total cost (15% on the remaining 40%). Other than that, 1% VAT (value-added tax) is also charged.
Also read: GST’s hidden treasure of USD 200 billion
Advertisement
However, in the suggested framework of GST, work contracts as well as sales of under-construction apartments will be most likely treated as a service, which means more prices since no abatement is allowed in lieu of land and other commodities such as steel, cement and sand used for the construction.
For example, if the GST rate is fixed at 12%, the net tax incidence will increase by the present 6%, and in case the rate is fixed at 18%, the rise would be a whopping 12%, says a report by ET.
Other than that, stamp duty, which is levied by the local state government on the registration of the property, is also not subsumed in GST, which means an additional levy of a stamp duty of 5-8% in different states.
Image source
Advertisement
- I got a $40K raise using this 30-second strategy. It made me realize loud work, not hard work, always wins.
- Qatar Airways' new CEO explains why it's sticking with the Airbus A380 as other airlines retire the costly superjumbo
- Prince Harry and Meghan found out about Kate Middleton's cancer diagnosis on TV like everyone else, report says
- BenQ Zowie EC2-CW review – Premium wireless mouse for gamers
- Banks' GNPAs set to improve further to 2.1 pc by FY25: Care Ratings
- FPIs make remarkable comeback, infuse ₹2 lakh cr in FY24
- PM Modi and Bill Gates discuss AI, climate change, millets and more
- Consuming excessive salt and inadequate potassium, protein is making North Indians prone to life-threatening diseases: Study