GST

Positive Impact of GST on under-construction Flats

The GST Council is probably going to consider bringing down GST on under-construction flats and houses to 5 percent in its meeting one month from now, an authority said.

At present, the Goods and Services Tax (GST) is required at 12 percent on installments made for under-construction property or ready-to-move-in apartments where completion endorsement has not been issued at the time of sale. Be that as it may, GST isn’t exacted on purchasers of land properties for which completion certificate has been issued at the time of sale.

This 12 percent GST rate ideally would are partly offset by means of taxes paid on inputs by builders and thus the particular incidence of GST on under-construction home consumers would are around 5-6 per cent. An authority said that presently builders are paying for the inputs for construction in money and don’t seem to be passing on advantages to buyers and thus, there’s a need to bring them to the formal channel.

Major construction material, capital product and input services used for construction of flats and homes attract 18 per cent GST, whereas cement attracts 28 per cent tax.

Prior to GST rollout, under-construction housing comes attracted 4.5 per cent service tax and a worth more tax (VAT) of 1-5 per cent betting on the state. Additionally inputs employed in construction attracted 12.5 per cent excise duty additionally to 12.5-14.5 per cent VAT. Besides, entry tax was additionally levied on the inputs. After adjusting for credits on inputs used, the effective per-GST tax incidence on such housing property was 15-18 per cent.

However, if the GST slab for real estate is finalised above 12 per cent, then, home buyers and developers may take a hit, at a time when property prices are already unaffordable in many places.

December 24, 2018 / by / in , , , , ,
Good news for Homebuyers – Loan limits increased for Affordable Housing.

The Reserve Bank of India made a decision to increase the limits on loans for PSL (Priority sector lending) which may assist in the first-time homebuyers get greater amounts of loans at better terms which in turn may boost the sales of Affordable Houses.

RBI revised the housing loan limit for PSL from Rs 28 lakh to Rs 35 lakh in cities with a minimum population of 10 lakh and from Rs 20 lakh to Rs 25 lakh in other cities. This is on condition that the overall cost of the house does not exceed Rs 45 lakh for metropolitan cities and Rs 30 lakh for other cities.

The RBI has also raised concerns over rising minor crimes and suggests at lesser loan to value of the property.

Reduced home loan interest rates and necessary impetus by the government has helped to boost sales of the affordable housing sector. The housing sector has been supported by the government through lower GST rates, affordable housing fund, increased duration of loans CLSS of Pradhan Mantri Awas Yojana (PMAY) and extended income tax benefits to apartments of maximum carpet area of 645 sq ft.

According to Khushru Jijina, MD of Piramal Finance & Piramal Housing Finance the decision would up the sales of affordable houses which will in turn help in economic growth.

The rating agency CRISIL is of the view that the decision will allow most of the housing loans given by banks to qualify for PSL which would be positive for the banks. CRISIL also added that as of April 2018, 37% of the housing loans given by the banks qualified for the PSL.

June 11, 2018 / by / in , , , , , , ,