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An apartment in Kolkata costs a significant amount of money to buy. If purchasing luxury flats in Kolkata is your goal, you should be aware of the Goods and Service Tax (GST). The GST is mainly applied to under-construction real estate projects. Projects which have received a compilation certificate from an appropriate authority are exempt from this requirement. 

Here we will discuss how GST will affect the purchase of luxury flats in Kolkata more thoroughly.  

 

Navigating GST on Flat Purchases

In 2017, the Indian government implemented a significant tax reform known as the Goods and Services Tax (GST). Homebuyers were subject to several levies, including central duty, service tax, and VAT, before the implementation of this tax. It provides a single tax rate, which is a much-needed adjustment. 

This rate was initially 12% for luxurious homes and 8% for those affordable homes. The percentage fell to 1% for affordable and 5% for luxury apartments following the 34th council meeting. However, this does not apply to ready-to-move flats such as Victoria Vistas and Luxuria Heights by the Salarpuria Group. 

Here is a simple breakdown of the impact: 

 

GST on Flat purchases in 2024

 

Type of Property	Rate
Flat purchases under construction (affordable housing)	1% without Input Tax Credit (ITC)
Flat purchases under construction	5% without Input Tax Credit (ITC)
Read-to-move flats	Nil

 

 

How does GST Positively Impact Real Estate?

GST on buying a house can lower the construction cost, and benefit the middle class. It reduces construction costs and promotes a unified taxation rate. 

 

Reduce Construction Cost

This remarkably reduces the rate of cement, steel and other materials. As a result, the construction expenses are drastically lower. This leads to a cheaper real estate option for homebuyers. 

 

Unified Structure 

This structure plays a crucial role in the real estate market. Before this even the raw materials that developers and builders purchased were taxable. Combining all taxes, the GST on the sale of luxury apartments fixes these issues.

 

Simplified Tax Rate

The Neutral Income Rate, which central and state governments determine for goods and services, can reduce tax-related problems. It also helps to preserve the transaction system. 

 

What are The Advantages of GST?

Reduced surcharge liabilities will make luxury flat purchases in Kolkata more enticing. Here are some benefits for you:

 

Reduce The Cost

When compared to the pre-GST scenario, the 5% rate represents a possible savings. More financial benefits result from this, particularly for opulent housing.  

 

Enhanced Transparency 

This provides a thorough and clear understanding of the pricing structure. It lessens the level of corruption in the government.

 

Improved Cash Flow

The buyer's cash flow situation may improve because of this reduction in the upfront surcharge outlay. This allows for more money for other investments and better financial planning.

 

Final Thought  

The GST has a significant impact on the luxury flat market in Kolkata. Before you buy an apartment in Tangra or South Kolkata, get comprehensive knowledge on this. Therefore, seek professional help in your homebuying journey. 

 

FAQs

 

Q. What is the effect of GST on property prices luxury segment?

Ans: GST has eased the burden on buyers of luxury properties. The rate of luxury apartments has come down to 5% from 12% after the 34th council meeting. 

 

Q. Why is there no GST on completed flats?

Ans: GST is applied to the service, and the buildings are considered a service. Once the flat is ready to move in, it is treated as a sale of an existing good and not a service.