In India, RERA and GST are the two major housing regulations that impact the price of a property. So much so that buyers often wait for a favourable change in regulations before buying a house. But, how do the housing regulations about RERA & GST work to affect property prices and your home buying experience? Let’s take a closer look.
Impact of GST on real estate transactions
1. How does GST affect property prices?
Before GST, the developers would transfer the cost of the taxes incurred to the homebuyer. There was no way to confirm if the charges applied were valid since most taxes were paid individually. Naturally, there was scope for possible ill practices, even fraud.
With the introduction of GST, all the taxes applicable were replaced by a single tax system offering a uniform regime to taxpayers. This means the taxes applicable would be stipulated beforehand, leaving no scope for fraud.
Moreover, GST introduced a new Input Tax Credit (ITC) to reimburse the excess tax paid at every stage. This ITC must be transferred to the homebuyers when they purchase their home.
Additional Read – Top Things Everyone Must Know About RERA Act of Maharashtra
2. What are the current GST regulations?
Currently, the applicable GST on RERAapproved projects depends on the type of property you get.If you’re purchasing an affordable housing option, for instance, the GST applicable is 1% without ITC. As for non-affordable housing, the GST stands at 5% without ITC.
Besides, did you know you’ll be charged additional GST depending on the construction status of your house? Yes. If you’re buying a ready-to-move house, no additional charges are applicable. Otherwise, you’re eligible to pay a 12% GST with full ITC.
3. What are the implications for buying a house?
Without a doubt, the amount of GST applicable on the property dictates its final price (and the home loan amount you take). So, the price will vary depending on the location and the construction status of your house.
Impact of RERA on real estate transactions
The RERA was implemented to uphold transparency in the home buying process and protect the home buyer’s interest. Since it is mandatory for all real estate agents and developers to get registered under RERA, homebuyers have lesser chances of facing fraud or delays. In fact, if home buyers get a loan for a RERA approved project, you can get approval more quickly and at affordable home loan interest rates.
Moreover, did you know home buyers can track the progress of your project in real-time? Yes! You can simply go to your state RERA’s digital portal and check the status of your project. This makes the buying process a lot transparent.
Additional Read – What is RERA?
Over to you
Now that you know all about RERA and GST regulations, you can go ahead and make a property purchase confidently.
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