Impact of GST on Home Loan and Property Buyers - Home Loan Blog - Tata Capital

How will GST Impact Property Buyers?

Mar 08, 2017

The government has been quite gung-ho about the passage of GST bill and is targeting to put it into action by 2017. Though experts have been claiming that it will be a big positive for India in the long run and that it will add 1-2% to India's GDP, how is it that GST will impact you, as a property buyer?

If you have been planning to purchase a house for some time, does it make sense to purchase the house before implementation of GST or after it?

The answer is still not clear as there are still a lot of details that the government is yet to come out with. People are still not sure whether GST will simplify and reduce the tax burden or further complicate the situation for home buyers?

As of today, service tax and VAT are the two main taxes that are levied on real estate transactions. But every state has its own set of rules that it makes it difficult to arrive at a common ground for comparing of tax rules. This is the biggest difficulty in understanding GST's impact on real estate transactions.

Some experts are of view that even though GST will be a big positive for the economy as it will bring in an era of standardization, the prices of properties might increase marginally in near term. Others are not very sure about the impact.

As for the developers, the GST will either keep the tax impact constant or increase it. Buyers looking to purchase houses using home loan will eventually be the ones bearing the brunt in case taxes are increased. Though tax-increase will not be charged directly from the buyers, the developers will use some means or the others to pass on this additional cost (increase in taxes) to home buyers to protect their margins.