Buying a Property in Mumbai 9 Things You Need to Know About GST

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Owning your own house is a dream for everyone, it
gives you the freedom to live on your terms and
allows total independence. Buying a house is a
big investment and it needs a lot of
introspection. From taking care of the finances
to the paperwork it requires a lot of work. One
of the important things to take care of is the
Tax process and as we all know that our Indian
Government has replaced all the other taxes with
GST (Goods and Service Tax). This article will
help as a guide for those who are planning to buy
a property in Mumbai and will provide all the
necessary details one should know about GST to
invest. So in the article, we will be discussing
9 things you need to understand about GST if you
are planning to buy a property in Mumbai.
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• What is GST?
• GST is an acronym for Goods Services Tax. It is
  a single, nationwide tax on products and services
  which replaces various indirect taxes levied by
  the central and state governments, GST has been
  in operation in India since 1 July 2017
• GST on affordable and non-affordable housing If
  you are planning to purchase an
  under-construction property like a flat,
  apartment, or bungalow, then you have to pay GST
  at the rate of 1 for affordable housing and 5
  for non-affordable housing. You also have to pay
  GST on developable plots. Developable land, in
  simpler terms, means the piece of land which has
  received all the necessary permission from the
  Municipal Corporation and local authorities for
  future development.
• GST on completed project GST is not applicable
  on completed projects or ready-to-move property.
  Those projects who have received a completion
  certificate from any competent authority come
  ready to move or complete projects.
• GST is not applicable in the purchase of land As
  the sale of land comes outside the purview of GST
  construction services, because it does not
  include the transfer of goods and services, hence
  GST is not applicable. Although stamp duty and
  registration charges continue to apply.
• Affordable property and calculation of GST rate
  Any housing unit whose worth is more than 45 lakh
  and measurement is up to 60 square meters is
  considered as affordable property. The area
  specified is only for metropolitan cities such as
  Mumbai, Delhi, Hyderabad, and the Chennai region.
  Any other place in India should cover an area of
  90 square meters.

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The following table shows the calculation of GST
rates on affordable housing property with the
before and after changes in the rate from April
1st, 2019
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GST rate on construction and building materials
If you have thought of purchasing land and wish
to do construction of your own, then it is a must
that you know the different GST rates on
construction and building materials starting from
the basic such as cement, bricks, steel to
interior materials like tiles, marbles, paints,
and electrical machinery and accessories. The
rate may vary from 5 to 28 depending on the
goods. One time maintenance deposit The Gujrat
bench of Authority for Advance Rulings (AAR)
recently made it important that an onetime
payment of an amount will be paid by the by the
buyer to the builder and it is non-re-fundable.
GST on rental property As long as you are using
your property for commercial purposes, you are
not eligible to pay any tax on rental income. But
if the landlord has allotted its property to any
visit enterprises for production, sale, or supply
for services, then 18 of GST is charged on such
rental income if it exceeds ? 20,0000 annually
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GST on home loans While applying for any type of
loan including a home loan, the bank charges some
service fees to us which can range from 0.25 to
1. And at the time of payment, we have to pay
the principal as well as the interest amount.
Hence it doesnt come under any goods or services
so no GST is charged on that. You have to pay
GST on the processing charges only. Currently,
the rate is 18 on all financial services, which
may vary in the future as per government norms
Current update on GST rate With an effect from
1st April, the GST council has decided to
increase the tax on the supply of bricks by 12.
And it may affect the property construction cost.
This step was taken after the meeting helped in
Lucknow on 17th September 2021 by the GST council.
You might come across several issues and concerns
regarding the tax process if you are not from a
financial background. We advise you to consult a
tax assistant or someone who has knowledge and
experience in it. Hope this article has been
informative for you to understand the basics of
the GST tax system and will help you to buy a
property in Mumbai with GST terms.
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