home loan

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 , , , , ,
RBI increases repo rate by 25 bps to 6.25%

RBI hiked repo rate, the rate at which the central bank lends short term money to commercial banks, by 25 basis points (0.25 per cent) to 6.50 percent. This is expected to lead to higher interest rates on housing, auto and other personal loans. This is first time in nearly five years that RBI has hone for a back to back hike, having increased repo rate by 25 bps to 6.25 percent in its last policy meet in june. Last time RBI had increased the repo rate consecutively in 2013. Trade tensions, crude oil prices, poor economic activity, rising retail inflation have been considered as the primary factors behind the hike in repo rate.

I think that hike in repo rate will impact the real estate sector as the revised rate would result in costlier EMIs for the home loan.

August 3, 2018 / by / in , , , , , ,