GST is also known as Goods & Services Tax. It came into existence on 1st July 2017. The major purpose of applying GST in India was to replace the old taxes and rules, such as Service Tax, Central Excise Duty, VAT, and Entertainment Tax. Being a unified tax mechanism, it has improved the taxation system in the country. It has also cleared the picture of the applied taxes on the trade of various goods and services.
In this information, we will discuss the GST on construction and ready-to-move properties. No GST is applicable on ready-to-move properties as per government rules. However, 5% standard GST is charged by the buyer on under-consideration properties. The GST is charged at 1% under the Affordable Housing Scheme supported by the government of India.
Types Of GST In India
- IGST – The Integrated Goods and Services Tax applies to interstate transactions. Any goods or services traded interstate are charged with IGST in India.
- CGST – The Central Goods and Services Tax is charged by the Central Government on the interstate supply of goods and services.
- SGST – The State Goods and Services Tax is charged by the State Governments of India for intra-state trading.
- UTGST – There is a specific GST applicable on the trade of Goods and Services with the Union Territories in India called the Union Territory Goods and Services Tax.
GST On Under-Construction Vs. Completed Properties
Before buying a property, one should know about the applicable GST on different types of properties in India. You can get the latest updates on the GST on completed and under-construction properties by visiting a trusted online property portal. Let’s discuss some basic differences between the two types of properties and the GST application.
- Applicable GST
A standard percentage of GST is applicable to the purchase of any type of under-construction property in India. Any property that is still under construction at the time of purchase falls under this category. However, no GST is charged from a buyer on the purchase of a completed property. As per the GST rules, such properties are considered as non-movable properties. Thus, no GST is charged by the authorities.
- GST Rate On Non-Affordable
In the case of completed properties, no GST is charged by the local government on the purchase of a property. The 5% GST is applicable on the purchase of any under-construction property under the non-affordable homes category.
- GST Rate On Affordable
No such taxes are imposed on the purchase of any already completed properties. However, the government plays an important role and supports property buyers by charging only 1% GST on the purchase of any type of under-construction properties in the country under the Affordable Housing scheme. The maximum property value should be less than 45 Lacs.
- Status Of Completion Certificate
A completion certificate is issued by the local authorities once the construction of a property is done, and the same is communicated through a report to the officials. Then, the authorities issue a Completion Certificate as legal proof. However, the completion certificate is not yet been issued in the case of the under-construction properties.
What Are The GST Implications In Case Of Purchase Cancellation?
If you have booked an under-construction property and have paid GST with the booking amount or with the final amount at the time of purchase before possession, you can apply for a refund if you plan to cancel the deal for any reason. The builder is liable to process the refund of GST paid by you. Though the refundable amount is subject to the agreement policies. However, no GST refund is applicable on the cancellation of a purchase deal of a ready-to-move property, as no GST is applicable on the purchase of a ready-to-move apartment.
Invest In GST-Free 3BHK Flats In Zirakpur
If you have read this information carefully, you might have an idea till now that you can invest in fully-furnished, ready-to-move, affordable 3BHK flats in Zirakpur. The biggest advantage of buying a ready-to-move property in the prime location of Zirakpur is the Zero GST. You don’t have to pay any type of GST on the buying of already-constructed apartments in Zirakpur and Tri-city. But if you want to invest in any under-construction properties in the city, you need to bear the 5% GST as per the guided GST practices.
Conclusion
GST plays an important role when a buyer plans to buy a property. It has different rules and principles for different scenarios. One must have sound knowledge of GST and its applications on the purchase of any ready-to-move or under-construction property in different cities in India. A unified goods and services tax applies to the trade of different types of property. GST has improved the old taxation policy on the real estate industry. If you have any queries, please get in touch with us 24/7.
