It is difficult to state whether the 12 percent GST on the sale of houses will increase the prices of properties or lower it. The GST will be in addition to the 6 percent stamp duty rate charged by the state. If calculated to the current overall tax paid in Maharashtra, GST would be higher as currently in Maharashtra tax paid is 4.5% service tax and 1% is VAT and there is also 6% stamp duty on the cost of the unit. Which brings the total to 11.5% and GST charged on the sale of houses are 12%and also a 6% stamp duty on the unit.
As per TOI analysis, the prices of the property would increase the cost of the unit but theoretically, they stated there would not much difference in the prices of the property. The builder is expected to bring down the cost of the unit, as they get input tax credit on raw material such as steel, cement, and sand.
Also Read: What Is GST?
But again the cost of land is not taken into account as of now it is outside GST ambit, if the cost of land is 10% of the overall project cost then the possibility of the rise in prices would low but if the cost of land is 60-70 % of the project cost then there would be rise in the prices of apartment.
On the other hand, the service tax of 4.5% on affordable housing has been exempted as per current tax regime. But as per GST, there is no mention of such exemptions. The prices of affordable housing could go due to higher taxes said Mr Praveen Jain, President of the National Real Estate Development Council while talking to TOI.
Most developers feel the prices should go up by 5-8%. The developers are being cautious as Real Estate Regulation Act (RERA) and GST is coming in simultaneously. It will take few months to see how the market would change said Gopal Sarda, Group CEO of the Kolte Patil Developers.