Is GST for under construction home less? How is GST calculated? Should I pay GST to builder?
Before the implementation of GST, the contractor’s costs included heavy occurrence of Entry Tax, Central Excise Duty, and Central Sales Taxes on the material and Service Tax on the services used at the time of construction. This is eventually passed on to the customers.
Under the Goods and Services Tax regime, contractors will have to pass on benefits of the lower tax burden to the customers. Contractors will stand eligible for GST credit paid on services and materials used for construction.
The effective Goods and Services Tax (GST) rate on the under-construction properties will be 12% and not 18%. This is due to the reduction in cost of land. President of CREDAI, Jaxay Shah stated that effective GST will stand at 12% and according to the law, the developers will be passing on the input tax credit benefits to the buyers.
The Government of India has levied a GST rate of 18% on the construction sector. However, the value of the land has been removed from tax computation. Due to the abatement of land value, the effective rate comes down to 12%.
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