Essential Facts About GST For Homebuyers

Indian market got acquainted with the Goods and Services Tax or GST on July 1, 2017. The unified tax regime has subsumed all existing indirect taxes into a single tax. However, Real Estate is a sector which will yet to be entirely brought under the new taxation regime. Experts believe that inclusion of real estate into GST ambit might prove to be a game changer for the sector. GST will absorb multiple indirect taxes into one single payable and thereby it will reduce the construction cost significantly.

Homebuyers are likely to be benefited with the better transparency as there will be a single tax to be paid on the real estate purchase. Let’s have a look at the GST impact on various aspects of home buying-

Luxury properties to be more expensive– The raw materials those are used at large in the development of luxury housing projects such as- glass, aluminium, monuments stones, ceramic fittings and lamps etc. will fall under 18-28% GST slab which is higher than the previous tax slabs. A higher tax rate will escalate the cost of the construction.

GST on under construction projects– The effective GST rate on under construction properties is 12%, but along with the stamp duty and the registration charges, it will be something around 17%.

No GST has been levied on ready-to-move projects which means investing in these projects won’t fetch you any tax benefits under the new taxation regime.

Impact on raw materials– The revised tax regime has brought a significant change in the pricing of the building materials. Developers can claim input tax benefits on the purchased raw materials now. While some of the construction materials will cost higher, there are certain materials which will cost lesser now. Here’s a comparative tax rate chart with respect to the major construction materials pricing-

Construction material Pre-GST tax rate GST rate
Cement 24 % 28%
Ceramic tiles 26% 28%
Paints and varnishes 26% 28%
Sand lime and fly-ash bricks 6% 5%
Pillars and iron rods 20% 18%
Putty and wall fittings 26% 28%
Wall paper 18.5% 28%
Plaster 26% 28%

“Potential homebuyers should know these facts about GST so that they can have the maximum tax benefits while purchasing their dream homes. Developers are asked to pass on the input tax benefits to the end-users by the GST Council which will be very much favourable from the buyers’ standpoint,”- said Mahesh Somani, Chairman- National RERA Committee,  National Association of Realtors India (NAR-INDIA).

LNN (Liyans News Network) – Buy/Sell/Rent properties across 100+ cities in India. If you are willing to buy flats in Kolkata, choose your favourite project from an extensive 72,000+ projects available. Invest now to avail 8-12% GST benefit.

About 45% Buyers Looking To Invest In Real Estate After Full-Length RERA Implementation

The market needs some more time to absorb the Real Estate (Development and Regulation) Act, 2016 (RERA) as still there are states and UTs those have not notified their respective real estate Act. States will have to carry out the regulations followed by the establishment of respective state RERA Authorities. RERA aims at organizing the real estate sector with the better transparency in operatives.

2018 market looks quite promising as RERA has already set the stage in the favour of the homebuyers in most of the states. Rolling out of RERA indicates approx 45% residential investment in the first half of 2018. With the steady confidence boost by RERA market sentiment is on its recovery path. The market is about to witness steady-going sale volume in the recent future.

“The successful implementation of RERA will reinstate the trust of the buyers at large. With the assurance of timely project deliverance along with the quality check RERA will significantly boost the demand of the real estate sector very soon,”- said, Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

Since RERA is the legal protector of the consumers in their real estate purchase, buyers will now have quality real estate products delivered on time. Currently, developers are offering attractive pay packages and discounts to steer clear their inventories. Again, investing in the ready-to-move project is favourable from the buyers’ standpoint as it is exempted from the GST (Goods and Service Tax) regime. Once, the consumer sentiment gets consolidated there will be no gridlock in new project launches. A balanced demand-supply proportion is likely to fuse the oversupply volume as well.

Image and video hosting

From May 1, 2017, the Act has been brought into action by the central government. It was the time when the market was undergoing the demonetization overhung. Thus, implementation of RERA made the realty sale graph even tender.Whilst no policy change or structural reform barely create any dent in the uninterrupted demand-supply chain of the affordable housing segment. During this massive slowdown, affordable housing sector contributed 17% of the total sale across the major cities of the country. It’s worthwhile mentioning, being the most incentivized sector affordable housing sector is expected to return a voluminous profit by the end of 2025. Buyers are in demand for budget housing ranged within Rs. 50 lacs at large. Alongside the inflation rates appear to have neutralized and lending rates have started declining as well.The availability of budget housing units and a sharp price correction in HIG segment opens a brighter market prospect for the buyers willing to purchase with self-finance.

LNN (Liyans News Network) – Significant price correction in prime area residential projects. Invest in luxury residential property in north Kolkata. Price has reduced by 12-17%. Explore available flats/bungalows/penthouses online. Buy/Sell/Rent properties online across 100+ cities in India.

Kolkata Properties Has Become Best Affordable in 7 Years

This is the ideal time to invest in Kolkata properties. For the first time in last seven years, the real estate industry observes a sharp price correction below invoice pricing. Currently most developers are offering exciting discounts on the effective price takes place during price negotiation.

Despite the average age and profile of the home-buyers are changing, the challenges associated with the home buying is still the same. Kolkata real estate market used to bank on the luxury housing sectors. Luxury real estate sector used to be the best-loved investment sector for the developers in Kolkata. Since the affordable housing sector has emerged as the key growth driver in the Indian economy, Kolkata developers are found trying the same shoe.

Affordable flats in Kolkata have turned out to be a steady contributor during these past watershed years of real estate business. Indian real estate market has poised for growth with the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) and Goods and Service Tax (GST). While the average quoted price of the projects is still constant, along with the inflation and the actual rise in construction cost Kolkata properties is upward, properties are being offered with an effective discount rate of around 12% which makes the homes in Kolkata cheaper than ever.

Tollygunge has seen the biggest price drop on per sq ft basis. There is around 17% down turn in the overall circle rate of this area. Flats in Rajarhat and Newtown have also witnessed around 12% dip on the earlier circle rate. In high-street areas of Kolkata such as – Ballygunge, Rowdon Street, Park Street are running with the static high price, while B.T. Road, Salt Lake, Behala, Jessore Road, Madhyamgram and Narendrapur have observed a lower price correction.

Currently, most of the developers are offering GST waivers at 7.5-8% range. While investing in an ongoing project, buyers have to pay an additional 12% as GST charge. GST benefit offer by the builders has appeared to be a big relief for the potential property buyers in Kolkata.

“Discounts and freebies have been always the effective fillers when there is an increased disparity between the demand and supply. However, with the existing market offers to buy home in Kolkata can be the most affordable from the buyers’ perspective. With countless offers available in the market, it’s advisable to keep a pre-determined list of your residential requirements which will help you in making quick decision,”-said Mr Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

LNN (Liyans News Network)

Importance of An Occupancy Certificate (OC) In Real Estate Deals

Who doesn’t want to own his/her own home and to give the family a secured shelter? It requires a whole lot of documentation and paperwork for buying your home in India. However, a majority of the home-buyers, especially the first time property buyers are either ignorant or pay the least heed to some of the most important documents, one of them being the Occupancy Certificate (OC).

As we all know that any real estate investment involves years of saving of the buyer. There is nothing that we can point out as a minimum investment from the real estate perspective. Owning a property can only give you a complete sense of ownership. The real estate project in which you are going to pour your hard-earned money can be labelled as “unauthorized” if it doesn’t obtain an OC. A little negligence in project documentation can pinch you harder in future.

Here are a few things that you should know about the OC

1. Occupancy Certificate is a certificate issued by the local civic authority after the completion of the project. An OC ready building is legally ready for inhabitancy.

2. Potential buyers should ensure that they have a clear knowledge about the Occupancy Certificate (OC) and the Completion Certificate (CC). CC is something that deals with the building configuration. CC ensures whether the construction has qualified to all the quality check.

3. In case the local civic authority finds a building without having an OC it holds the ultimate authority to even bulldoze the property straightway. Only an OC ready project is entitled to have both the basic and the advanced civic amenities. Also, there are many payment plans that are linked to possession. Consumers have all the rights to hold back the final installment till the builder receives the OC.

Image and video hosting by TinyPic

4. A property without OC, will invite lower returns during resale. In case the developer refuses to provide the OC you can issue a notice asking him to apply and hand over the copy of the OC. Make sure the builder hands over you not the application of the OC, but the copy of the OC stamped by the local civic authority which states that the property you are purchasing is ready for inhabitancy. You can also approach the consumer forums and file a petition seeking the OC.

5. However, with RERA implementation builders are asked to update the quarterly progress of their construction works on the respective state RERA websites. Possession is not complete without builder obtaining proper OC from the authorities.

“Builders might force you to have a quick absorption for selling out their inventories. Don’t fall in to such traps. Ask for all the legal documents related to the project from the builder before coming to an agreement,”- advised Mr Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

LNN (Liyans News Network) – The leading property portal with the biggest ever property showcase. Buy/Sell/Rent properties online across 100+ cities in India. For property buying property drop your property requirement under post your property requirement in Kolkata and avail easy real estate solution.

Budget 2018 to Benefit Homebuyers?

Indian real estate sector had experienced a massive slowdown during 2017 as it was regarded as a watershed year for the realty stakeholders. Starting with the Demonetization, moving ahead with rejigging measures like RERA, GST and Benami Property Act the sector had witnessed a slew of institutional policy changes and reforms. However, the market is on its way to restoration and expecting some beneficial manoeuvres from the Union Budget 2018.

Union Budget 2017 appeared as a big boon for the affordable housing sector, where the budget granted the ‘infrastructure status’ to set a bigger pitch for the urbanization in tier-II and tier-III towns.

We’ve therefore tired to analyze the expectation of the home buyers from the Union Budget 2018:

The compensation limit for housing loss should be increased– The previous budget constrained the loss of housing property which could be a set-off against other income to Rs. 2 lacs. House property loss in excess of Rs. 2 lacs has to be extended and adjusted against the rental yields of future years. Buyers are expecting an extension of this cap so that tax payers get allowed setting off a larger part of the house property loss against other income.

Increased deduction for pre-construction interest– As per the Income Tax Act, there is an interest on the home loan that is paid for the phase during which the house is under the construction. Later on, this amount can be claimed as a deduction in five equal installments from the financial year in which the house is finished. The cap on the deduction of home loan interest was a major shock for the landlords. From the upcoming budget 2018, home buyers are anticipating that the deduction for the pre-construction interest should be approved in the year of payment. Furthermore, a separate limit should be laid down for the deduction of Rs. 2 lac and above.

Image and video hosting by TinyPic

Delay in project completion should be strictly handled– Presently the deduction of the interest on the home loans has been extended to Rs. 2 lac from Rs. 30000 given the fulfillment of the condition that the property has been developed within 5 years from the end of the financial year in which the loan has been borrowed. A tax payer might lose a huge amount under this existing set up due to the builder’s dillydally in project deliverance. Even though RERA mandates timely completion of the projects, IT rules should also recognize this problem and grant buyers a relaxation of the period if the project gets delayed.

“This year the expectation from the budget is relatively high, as the previous budget reduced the average tax payer’s burden. Also, all the existing issues related to GST tax slabs expected to be closely scrutinized so that the market gets vastly benefited from the unified tax regime,”-said Mr Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

Asking on the real estate market expectation from the upcoming Union Budget, Mr Somani said, “Homebuyers and realty investors had opted for a defence mechanism when it comes to real estate investment in 2017 as the sector got impacted by several governmental policy decisions and reform measures. The forthcoming budget is expected to push the market performing better.”

LNN (Liyans News Network)– Buy/Sell/Rent properties online with us. To invest in Kolkata housing projects explore available luxury residential units under residential property sale in Kolkata. We are currently showcasing 72,000+ properties in Kolkata and suburbs of West Bengal. Avail easy home loan facilities.