Commercial Property Dealing and GST

GST is one among the various taxes of VAT, service tax, registration fees, that the real estate dealers have to pay. It was introduced in 2017 and has its effect on a multitude of things. The 34th meeting on March 2019 reduced the GST rate on under-construction houses. Real estate in India is the second largest employment industry after the IT sector.

GST and Buyers

For a buyer to purchase a body under construction, previously they need to pay the service tax, VAT, stamp duty, and registration fees. With the levitation of GST on real estate all properties under construction are subject to pay 12percent tax rate. Thus for buyers, this acted as a benefit, reducing the cost of properties.

GST and Builders

Raw materials importing is the mandatory task for builders which required a heavy payment of multiple costs previously like VAT, Excise duty, customs duty, entry taxes and others. Numerous service taxes were also to be paid among others. With GST in effect, all these taxes has been considerably lowered. The sellers of commercial property for sale in India should be clear about the percentage of GST that is included in the price while advertising any property.

GST and Commercial properties

The real estate sectors functions with transparency and efficiency with the introduction of GST in it. The general increase in price for residential properties may be less than that of commercial properties for sale in India. Previously, landlords were required to pay some heavy service tax if they were to let out a property. At times, the residential properties were even used as commercial property. On a commercial property, goods and service taxes are not applicable. In case of completed buildings the service of construction supplying does not hold ground, as a result of which GST will not be applicable to such properties.

GST is levied on commercial rental income through rents, easement, lease or license. Also, the commercial properties for sale in India is charged with GST when it is let out on rent. As per the rules, any immovable property that will be rented out shall pay a GST of 18%. Anyone with an income of 20lakhs or more must pay a GST on the amount while those below it are exempted up to another 10lakhs of earning. Those paying GST on commercial property in India can ITC on the total due taxes.

Claiming GST Credits on commercial property purchase

If a buyer of a commercial property for sale in India registered for GST want to obtain GST credits, they need to assure the fulfillment of some requirements:

• GST should be paid at settlement

• Both the parties should be GST registered

• Property should be used in the working of an enterprise

• Tax deductions must be handled within four years