Expat Housing, Rental/Outright Properties & Relocation Solutions in Mumbai

Want to buy a property in Mumbai – 9 things you need to understand about GST

Are you willing to Buy property in Mumbai? If yes, indeed it is a good decision as nothing is better than owning a property in the economic capital of India. Many-a-times, you might hold back your decision due of the doubt on return on investment however when the city itself holds a tag of “economic capital” then such worries should definitely take back seat. With the city having exponentially growing graphs since many decades that is expected to continue in the future too, your decision to invest in Mumbai real estate can never prove you wrong.

Controlling the two main concerns of how to pay and how to manage the property as per our aptness is in our hands. Furthermore how much to pay needs awareness as it is ruled by the government and concerned authorities. The reason behind is that real estate investment is not limited only up to the actual amount of the property; rather it includes a huge amount of tax and other surcharges too. Thus, in order to invest your hard grossed capital, you need to know all about it.

GST and Real Estate – what is to be known?

Since July 1, 2017, the new tax regime known as GST (Good and Service Tax) has been implemented that is accepted nationwide and has relieved all other taxes applied earlier. Although having a wider role, the concept and impact of GST are not understood in depth by all. Also in case, your investing destination is somewhere in Mumbai, it becomes essential to invest correctly to get the most and clog out from fuss around.

Hence, understanding a few things about GST’s impact on investment becomes imperative before you invest. Below mentioned are 9 points that you need to acknowledge before you finally invest:

  1. GST rates and abatement of land – GST rates 12% and land abatement rates 50% out of which 25% is the rate of lands and remaining 25% is the rate of goods. Hence, the average cost calculated comes out to be 14% that is higher than what was paid. Thus, the property under construction is expected to rate high after GST.
  2. Impact of GST on Under-construction property – For an under construction property, one has to pay both VAT (varying from state to state) and service tax 4.5% and stamp duty is not included in the GST. Thus, all three makes the property costly.
  3. Impact of GST on affordable housing – There is no tax for “housing for all” plan under the GST thus it does not affect affordable housing section.
  4. Impact of GST on ready to move property – Ready to move properties are relieved from GST that have an occupancy certificate as compared to under construction GST rates of 12%.
  5. Remove other taxes – More than 16 taxes merge together to form GST, this, in turn, stops unwanted taxation under different slabs. Thus, GST is profitable for both home buyers and sellers.
  6. Impact of GST on construction materials – Under GST, cement costs at 28% that is higher than previous rates of 20-24%, iron rods around 18% a bit less than an earlier tax of 20%, sand-lime bricks and fly ash bricks costs 5% each that was 6% before.
  7. Impact of GST on interior designing materials – Like construction materials, GST also has its impact on paint, plaster, wall fittings and wallpapers wherein rates have increased to 28% from 20-25%.
  8. Impact of GST on developers – Claim of input tax credit improves the profit earned by developers under the GST.
  9. Legality under GST – Government includes an anti-profiteering clause under the GST bill which makes it mandatory to pass the tax reduction benefit to the end user.

 Thus, no matter whether you are investing in Borivali or Santa Cruz or any other place in Mumbai, GST rules should be mugged up for all.

By: Pritesh

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