Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply
Quick Links for loans
Quick Links for Insurance
Investment
Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Loan for Home > How to Calculate GST on Home Loan

Loan for Home

How to Calculate GST on Home Loan

How to Calculate GST on Home Loan

Goods and Services Tax is a comprehensive tax system introduced on July 1, 2017. With this uniform taxation system in place, the real-estate sector has become more transparent in its dealings, leaving a positive impact on potential home buyers.

That being said, if you're planning to opt for a loan to buy a house, it is vital to know about the GST applicable on the same. While GST doesn’t directly affect your loan EMIs or home loan interest rates, it applies to the processing fee and various other charges on your loan.

Let’s understand in detail below.

Impact of GST on housing loan

To begin with, GST is not applicable on home loan taken for ready-to-be-occupied properties. On the other hand, under-construction residential properties and projects that haven’t received the Occupancy Certificate (OC) come with a GST rate of 12%.  Moreover, you have to pay GST on the loan processing fee, which stands anywhere between 0.25% to 1% of the total loan amount.

Additional Read: How to Calculate GST on Under Construction Property with Examples

How to calculate GST on home loan

The method to calculate GST on housing loans is fairly straightforward. Since it is levied on the processing fee on your housing loan, all you have to do is calculate 18% of the total fee charged to you. While in the case of under-construction property, you have to calculate 12% of the overall processing fee.

For instance, if you have taken a loan amount of Rs. 50 lakhs, the processing fee will be between Rs. 12,500 to Rs. 50,000. Now, consider a GST rate of 18% on this fee, and it will amount to Rs. 2,250 to Rs. 9000. Therefore, the total amount payable will come somewhere between Rs. 14,750 and Rs. 59,000 on the loan.

Impact of GST on home loan EMIs

Since GST is levied on under-construction properties, it will significantly lower the cost of property and lead to lower EMIs for you. While the current standard GST rate on housing loans is 18%, the effective rate comes down to 12%. This is because builders transfer the input tax credit benefits of 6% to the buyer.

Here are some of the effects of GST on housing loan EMI-

  • As of April 1, 2019, the GST rate for under-construction flats has been reduced to 5% and that on affordable housing has been cut down to 1%.
  • Since no GST is applicable on ready-to-move-in flats, the developers have to bear the tax burden for these projects. This essentially means a higher cost of property and a higher cost of housing loans for you.
  • The new GST rates have reduced the total production cost incurred by the developer. As a result, many are taking up affordable projects. This revision can make housing loans more reasonable for you.

Additional Read: Things You Need to Know in Housing Regulations about RERA & GST

The bottom line

Now, with the reduction in GST rates on loans, purchasing your dream home has become more affordable than ever. To maximise your savings, choose a reliable financing partner like Tata Capital and enjoy attractive loan options at easy-to-meet home loan eligibility.

Enjoy a quick application process along with swift disbursal and get your funds in no time! Use our home loan EMI calculator and estimate your EMIs.

Apply Now
Disclaimer

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Important Information

Investor Information

Visit us on:,Visit us on: www.tatacapitalmoneyfy.com,www.tatacapitalmoneyfy.com

Our Private Equity Funds

Amalgamated Companies

Top Branches

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.