As a result of the uncertainty surrounding the potential impact of GST on many businesses, including the real estate market, the recently enacted GST bill in the Rajya Sabha has sparked a number of questions.
The relationship between the Goods and Services Tax (GST) and house loans is explained in the following.
Enhanced Transparency
Building and home-owners alike were burdened with several taxes prior to the establishment of the Goods and Services Tax (GST). By including these taxes into the purchase price, builders are able to recoup the money they spend in taxes from their customers. Both parties (builders and owners) are now required to pay a single tax as a result of the GST. As a result of the implementation of the Goods and Services Tax (GST), the real estate market has become more transparent for the average consumer. As many as 16 different and complex taxes would be consolidated into one simple tax, according to experts, in the shape of the GST.
Added Benefits for the Buyer
Reduced costs for housing developments across the country is a goal of the GST. The various taxes stated in the preceding paragraph account for around 22% to 25% of the total cost of a property, which is a significant amount. Multiple taxes will be abolished and a system of taxation will be established under GST. The decrease in housing prices will also make it easier for people to get a mortgage. It is possible that financial costs such as loan processing fees, debit/credit charges and insurance premiums etc. would rise as a result of the law, despite its stated goal of reducing various taxes.
There is a disadvantage to GST in that all of the benefits listed above would only be realised if the combined GST rate is lower than the total of all the individual taxes combined. It is possible that the introduction of GST may reduce transportation costs, allowing builders to take advantage of decreased expenses and develop more inexpensive houses. Even though the majority of real estate specialists believe this will take several more years to materialise. The bill's implementation won't begin unless it wins presidential approval, making it an enactment.
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