Goods and Service Tax (GST) is an indirect tax in India imposed when a customer buys a good. GST is regarded as an indirect tax imposed on the sale, manufacture, buying of goods. The aim of GST is to remove all the indirect taxes imposed on goods by the Indian Central governments and State governments.
The current situation of India is that there are taxes present at various rates and in different stages like the Centre has the taxes like Service tax, Income tax, Central sales tax, Security transaction tax etc. and on the other hand the State has entry tax, agriculture tax, property tax. The increasing of taxes at different level affecting the selling as well as the rates in domestic and in the international markets.
In keeping the federal structure of India, it is proposed that the GST will be issued both by the Central Government (CGST) and the State Government (SGST). Prime Minister Narendra Modi introduced GST in India on the midnight of 1st July 2017.The development of GST took many negotiations as well as revisions before getting launched in India in its final form in the year 2017.
During the 33rd Council Meeting of GST held on 24th February of 2019, the new rates of GST have been initiated on property prices in India that will come into effect from 1st April of 2019. Under the new GST system rates of property prices have been suggested and they are follows:
- A GST will be charged at 5% without Input Tax Credit on property of residential.
- A GST will be charged at 1% without Input Tax Credit on the property of residential.
In case of the property that are under construction a GST of 12% will be charged on real estate in India. On the resale of properties which are old here GST is not applicable on that.
Moreover, during the previous taxation system, various taxes like VAT, stamp duty charges, registration charges, service tax were applicable for the real estate. But after the introduction of the new taxation system GST on the real estate has made it simple in taxation in India that range from 5% – 8% that depends on some key factors.
However, GST is not applicable for the following construction activities and they are:
- Property resale.
- Purchase/Sale of land.
- Sale of ready to move in flats.