When the Goods and Services Tax was implemented in early 2017, industries across the country were impacted, and real estate was no exception. However, there is a reason to rejoice – the 33rd GST Council has announced a significant drop in the tax bracket of affordable and residential real estate.
The residential housing segment has seen a drop from 12% with input credit, to 5% without input credit. The affordable housing segment has been reduced from 8% with input credit, to 1% without input credit. If you are still on the fence about buying properties in Chennai, we are here to break down this change for you!
What does this mean?
For a property to qualify as affordable housing under the GST, the total carpet area should be below 60 square meters in metropolitan* areas and 90 square meters in non-metropolitan areas. The property value should not exceed a total of INR 45 lakh, in both metropolitan and non-metropolitan areas, and anything above this falls under residential housing category. *Metropolitan areas include Delhi, Noida, Greater Noida, Gurgaon, Ghaziabad, Faridabad, Mumbai, Bangalore, Hyderabad, Chennai and Kolkata.
Benefits for builders
Under this new tax regime, it is anticipated that there will be better compliance with GST laws. Additionally, builders get a one-time option to choose between the old tax regime and the new one for upcoming projects. While there is a little uncertainty about input credit accumulated by builders due to long term purchases, the GST Council is expected to come up with an answer soon.
Benefit for buyers
Real estate is the second biggest contributor to the nation’s GDP, after the IT sector. This tax relief will reduce the prices of residential and affordable housing, a welcome respite for buyers. If you are in the market for flats in Chennai, this is the perfect market for your real estate purchase.While there are still some questions left unanswered, this is fantastic news for the real estate segment. Schedule a tour of our upcoming apartments for sale in Chennai to know more.