Most of the small and big businesses and organization
contributes to the Indian Economy, and one of the most important fields is the
Real Estate which contributes about 6-8 percent to India's GDP(Gross
Development Product) and it stands second for the employee generation. Earlier,
the multiple taxes, such as Service Tax, VAT, etc., were applied on a single
product, and the tax system varies from state to state, But now the GST(Goods
and Service Tax) has changed the picture of the taxation system. So the new
companies and startups should apply for GST Registration to get more
benefits.
Here we will discuss the updates and take acumen about the
GST update that is imposed on the Real Estate.
The taxation system of Real Estate under GST:-
The Latest GST Council meeting was rescheduled on the 24th
of February 2019, and Finance Minister Arun Jaitley chaired it. The GST updates
are taken from the 33rd GST council meeting. The taxation system is mentioned
below.
- The GST does not apply to the Ready to Move properties(RTM).
It is not applicable because as per SCHEDULE III of CGST Act,2017, the sale of
the property is treated as an activity which is treated neither supply of goods
and nor supply of the services The input tax credits is also not applicable on
the Ready to Move(RTM) properties.
- According to the Schedule, I of CGST Act, 2017, the GST
applies to the Under Construction Properties, and the tax rate is about 8%. The Input Tax Credits are also applicable to the Under Construction
Properties.
- The GST is not applicable also on the purchase of land,
sale, and resale properties, and not the Input Tax Credit applies to these
kinds of properties.
Under the Previous taxation system before GST, the buyer had
to pay VAT, Service tax, stamp duty, and many taxes, under GST, the buyer had
to pay only 12 percent as a single tax rate. Hence the GST taxation system is
beneficial for the buyers as the price is reduced under GST.
Conclusion:-
The single tax rate is applied to all the products under the
Goods and Services Tax(GST), and hence it reduces the cost of the products. The
Person involved in a Real Estate Business should have the acumen of the GST and
GST Registration so that he can benefit from GST.
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