GST in real estate 2023: Gst Rates on Flat Purchase

In India, whenever we buy something we have to pay Goods and Services Tax (GST). It is also applicable in the real estate industry. A home buyer has to pay GST during buying a property. So it is obvious that it has a lot of impact on the buyers and the real estate agents as well. In this blog, the ratio of GST, different conditions, and their impact on the industry will be discussed.

What is GST and why is it important? Gst in Real estate :

India is a large & diverse country. There are many socioeconomic factors that impact the economy. So it is important for India to introduce a simplified taxation system.

Complex systems always demotivate the users and increase the time in the system. So it was the need of the hour for India to make a simplified tax system. So the government of India introduced the Goods and Services Tax (GST) in the year 2017 on 1st July.

This new taxation system deleted many taxes such as excise duty, services tax, customs duty, surcharges, State-level Value Added Tax (VAT), and Octroi. This helped in reducing the complexity of the system and helped in making a uniform taxation system in India.

What is the rate of GST on the flats? Gst in Real estate :

In the new rule, you have to pay 12% GST during buying the home if you are choosing an under-construction property. At the same time, if you are buying the property in a ready-to-move property or fully completed project then you do not need to pay this GST at all. Additionally, it is also important to mention that if you are buying flats, apartments, and bungalows which come under affordable housing (properties with specified price brackets and carpet areas) then you have to pay just 1% of the GST while for the non-affordable ones you have to pay 5% GST. If you are buying a flat from Realtech Nirman then you do not need to worry about the GST. Realtech Nirman will help you to understand this.

In this topic, it is important to mention that buyers prefer Gst on the under-construction property more than the fully completed project. In under-construction properties, buyers have the freedom of changing the design or pattern or they can increase or decrease the room size according to their needs. However, it is not possible once the project is fully completed.

What is the GST rate on construction materials? Gst in Real estate :

We have to pay GST on every purchase and the construction materials are not out of this. As these costs also include in the price so we have to consider these factors as well.

The GST rate on construction services is 18%. However, this rate varies in the construction sector as for affordable housing; it is 1%. The input service and construction materials rate is 18%, while other segments have 5% while the GST rate on construction services ranges from 8% – 10%.

The GST tax on the construction business is calculated on the basis of the whole expenditure of the process. For example, in construction work, you will need sand, cement, etc and you will need laborers as well. So on the sum of labor charges and the prices of construction materials, the GST will be charged. However, you will need a lot of materials for construction and the GST charge is different for every material.

What are the different charges for construction materials? Gst in Real estate :

1. Cement: There are many types of cement such as aluminous, slag, portland, hydraulic, or super sulfate types of cement and the GST charge is the same for every kind of cement. The GST charge is 18%.

2. Sand: Just like the cement there are various types of sand as well. The types are tar sand, oil shale or bituminous, asphalt, asphaltic rocks, natural asphaltites, bitumen etc and the GST charge is 18% for these all. However, if you are using natural sand for the construction business then the charge will be 5% only.

3. You will need pebbles, crushed stones and gravel for the construction and the GST charge for these all is 5%

4. Bricks: Bricks also has many types under it and the GST charge differs. If you are using building bricks, fly ash, siliceous, or other fossil-made bricks for the construction then the charge will be 12% while for the refractory bricks or bricks of pressed or molded glass, the GST charge will be 18%.

5. You will need tiles and ceramic goods for the construction and the GST charge is 18%. However, this charge will increase to 28% if you are using glass-based blocks used for paving, concrete or artificial bricks can reach up to 28%.

6. Marble & granites are one of the most important materials for construction and if you are using the blocks of marble and granites, the charge will be 12%. However, if you go for the marble & granites which are not in the shape of blocks the GST charge will be 28%.

7. The GST charge on basalt, sandstone, porphyry, and other sandstones is 5%.

8. The GST charge on iron & steel products is 18% and it includes all the types such as blocks, rods, or wares.

9. You will need tiles (Earthen, roofing) for construction and the GST charge is 5%.

10. The GST charge on wall tiles is 28%.

11. You have to pay an 18% GST charge for bamboo floor tiles.

12. The GST charge on artificial stone, cement, and concrete tiles is 28%.

13. The GST charge on copper wires is 28%

14. You have to pay a 28% GST charge for Paint and varnish.

15. The GST charge for pipe fittings is 18%

16. The GST charge for ceramic sinks and bathroom fittings and wallpapers is 28%

17. The GST charge for locks is 18% and for base metal mountings and fittings it is 28%