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New GST Rates on Residential Property Appears as a Driving Factor for Home Buyers

Real estate industry is known to be of the most salient pillars of the Indian economy as it also contributes between 6-8% to India’s Gross Domestic Product (GDP). Real estate is said to be one of the fastest growing sector all over the world as well as in India. Real estate business is also growing at a scorching pace in India leading to increased demand of affordable housing requirements, proposed development of new cities, initiatives of government for modern cities as “Smart Cities“.

Real estate has witnessed a lot of changes over the time. The impact of GST has been very instrumental in changing the entire dynamics of real estate industry. Indirect taxation completely revamped when GST came into picture. With multiple taxes applied previously like Service tax and VAT, the inclusion of GST in real estate increases transparency and organisation in the sector. With the announcement of latest amendment, GST prices cut down to 5% from 16% increases the bandwidth of the buyers and end users. The GST on under-construction flats which does not come under the affordable housing segment, has been reduced to 5 per cent that is likely to increase its demand. GST on under-construction properties also expand the scope of the affordable-housing category that would improve affordability and support demand.

New GST Rate on Affordable Housing –

Affordable Housing (%)   1
Others(%)   5
Input Tax Credit  No
Affordable Housing  
Area (Sq. m)  60-90
Value (Rs mn)  4.5

Source : PIB, Kotak Institutional Equities

The cut down on GST prices as mentioned above has been very instrumental in increasing the demand for affordable housing. As per the definition of Council with relation to affordable housing for the purpose of availing of GST benefits, to those flats costing up to Rs 45 lakhs and measuring 60 sq metres carpet area in metros (Delhi-NCR, Bengaluru, Chennai, Hyderabad, Mumbai-MMR and Kolkata) and 90 sq metres carpet area in non-metros. Everyone dreams of their own house and it is one of the biggest investments for most of us. This is why it needs a detailed research as in where to invest. Noida has emerged as one of the most hot selling investment destination in the recent past.  Being home to several renowned institutes & colleges, Noida attracts a good amount of traction. There are several residential and commercial projects that are executed in Noida by acclaimed builders and developers. One such project is Wave City on NH24 that is designed to cater all the needs of its residents. It is one of a kind project that offers an excellent blend of commercial and residential projects including High Rise Apartments, Independent Floors, Villas, Affordable Housing Units and Shop & Office spaces.

New GST rate on flat purchase has given an edge to this project as it has become significantly cheaper now. As the buying capacity of the end users have increased due to reduced GST on residential property, Wave City comes up as the most sought after destination. The state of the art architecture and world class amenities is designed to provide a good lifestyle to its residents.

Image Source : Shutterstock

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