gst on property

Now the tendency of buyers is to purchase ready to move flats.............

Because its cheaper due to savings of 12% GST, while builders are in need of cash........ huge pile up stock of unsold flats .......... even discount offered for down payment........

Earlier the builders/developers were avialing composition scheme and used to pay 4.5% ST and 1.25% VAT on Flat sales. Input credit was denied as abatement has been given.

And in the GST regime, though the rate of GST is 18%, 100% of Input credit ( subject to furtherance of business and blocked credits) has been given as credit. All the builders are supposed to pass on the benefit of the same to buyers.

Thouhg the tax rate is 18%, 1/3 of the Land cost to be excluded from the value of sale value, therefore effective tax rate is 12%.

If we can observe there is a around 6% of tax increase (12%-5.75%) whereas seemless credit has been provided. Hence builders are supposed to pass on the benefit ranging 2-3% on sale value.

But most of the builders are not passing on the credit further incresing the costs.. Lets wait and watch for 2-3 months how the industry behaves.

Earlier the builders/developers were avialing composition scheme and used to pay 4.5% ST and 1.25% VAT on Flat sales. Input credit was denied as abatement has been given.

And in the GST regime, though the rate of GST is 18%, 100% of Input credit ( subject to furtherance of business and blocked credits) has been given as credit. All the builders are supposed to pass on the benefit of the same to buyers.

Thouhg the tax rate is 18%, 1/3 of the Land cost to be excluded from the value of sale value, therefore effective tax rate is 12%.

If we can observe there is a around 6% of tax increase (12%-5.75%) whereas seemless credit has been provided. Hence builders are supposed to pass on the benefit ranging 2-3% on sale value.

But most of the builders are not passing on the credit further incresing the costs.. Lets wait and watch for 2-3 months how the industry behaves.