Real Estate में GST कितना और कैसे लगता है ? - YouTube

Subscribe to the Asset Yogi and press the bell icon

To watch the latest finance videos above all

Music

Namaskar, my name is Mukul

And you are welcome to the Asset Yogi

Where we unlock the knowledge of finance and real estate

Many subscribers asked me about the GST

What is the impact of GST on real estate?

Explain this in detail and in simple language

So I thought this is quite a good occasion for making a video about GST

Because recently there has been an update from the government's side

Where the GST rates are decreased to 8% from 12% on affordable housing

So in this video, we are going to see in detail

that how much GST is applicable on what type of property?

Whether it is ready to move property,

any plot or an agricultural land

Whether it is an under-construction property or rental income

We will see all these things in detail

Along with that, we will understand the input tax credit

What is an input tax credit in simple terms?

And what is the benefit of it for the buyer?

So stay tuned with the video

So that you will not miss any important points.

Let's go straight towards the blackboard

So in this quick video, we will learn how GST is applicable in real estate

There are different rules in different properties

The first thing that you have to remember is that

The GST is applicable from the 1st of July, 2017

Now, what is the importance of this date?

We will understand this is in detail

So if we talk about the ready to move property then the GST is not applicable to that

So what is the meaning of ready-to-move property?

If any property has got the completion certificate

Then it is considered ready to move property

The GST is not applicable to that

So if you buy a built property

whether you buy it from an individual or the builder

Then the GST is not applicable to that

If you talk about the plot and land then

the GST isn't applicable to that either

Plot and land are not considered as goods or services.

That's why the GST isn't applicable on that.

If we talk about under-construction property

So GST is applicable on under-construction property

whenever you buy a property from any builder

So how is it applicable?

The under-construction property comes under the 18% tax bracket

⅓ value is considered of land in 18%

So land is niether considered as goods nor services

So that's why 18% is levied on ⅔ of the property value

Assume the value of any property is 60 lakhs

So the GST will be applicable on the value of only 40 lakhs

The GST will be levied on 40 lakhs Rs

So if we say what is the effective rate?

Then the effective rate is 12%

Right? So if I do ⅔ of 18% then

the effective rate would be 12% for under-construction property.

After that, we will see the importance of the date of 1 July 2017 first.

So if you have booked any property

whose construction was started before 1 July 2017

So all the invoices raised before July 1st, 2017

The service tax and VAT are levied on that.

Now this service tax is a central tax

So this was generally 4.5%

The one which was levied before 1st July 2017

And VAT is the matter of state

There are different rates of VAT in every state

So if we take an example, assume there was a VAT of 5.5% in any state

So the total effective rate of tax was around 10%

But now after 1st July 2017

because of the applicability of GST,

all the invoices raised after 1st July 2017

The GST of 12% will apply to them

I think this is quite clear here

Now we will talk about affordable housing.

Since earlier, affordable housing was in the bracket of 12%

But a new update has come on 25th January 2018

The government has given the discount of 4% on this

This means there will be an effective rate of 8% GST

in affordable housing

which comes under the CLSS scheme

Pradhan Mantri Awas Yojana

CLSS scheme is Credit Link Subsidy Scheme

In which you get subsidy on the interest rate of home loan

So first you get the subsidy on a home loan under the CLSS scheme

And with that, there is a discount of 4% on GST

So, 8% GST is applicable

With that, there are low-cost housing projects

which has infra status

GST of 8% will be levied on that also

Now we will talk about rental income. In rental income

If you have a residential property, then the GST will not be levied on that

GST is not applicable on the rental income of the residential property

But 18% GST is applicable on commercial property

Because this comes under the services category

So 18% GST is applicable on commercial property

But only in the case where your annual rent is more than 20 lakhs

If your annual rent is less than 20 lakhs from commercial property

Then the GST will not be applicable in that case either

So these were the broad things

How GST is applicable in real estate

After this, many people ask questions about

What is an input tax credit?

And what is its benefit?

So I will explain to you quickly what is an input tax credit

So if we talk about the builder

whenever a builder builds a house or a building

Then there are three main components in that.

The first is the land,

The other one is the raw materials

Raw materials mean goods

After that, another component is services

Services are contracts. Contracts mean someone is the architect

Someone is CA, someone's the contractor of the building

To whom the work is outsourced. So the GST is levied in different ways

to all these three. The GST isn't levied on the land as we have already seen

The GST of 5% to 28% is levied on the raw materials

Now, what is the meaning of 5 to 28%? It means on some raw materials it is 5%

On some, it is 12%, 18%, or 28%

Along with that, all the work contracts which we are talking about

Architect or the construction work is outsourced to a subcontractor

Then the GST of 18% is applicable on that. So if we take an example

Assume the cost of any property is 40 lakhs

Then if we say the input GST that the builder has already paid

to buy the raw material or the services

We will consider it to be approximately 4 lakhs Rs.

On the other hand, if we talk about the output GST

Then it will be charged 12%

Builder will charge you 12% as a buyer

So if we talk about an example

The GST of 4.8 lakhs as 12% will be charged on the property of 40 lakhs

We call it the output GST

Now the government says that the input GST of 4 lakhs

All this can be credited

What this means is the builder has already paid the 4 lakhs

For purchasing raw materials or the services

Now he has to pay the taxes on only 80000 Rs

So 4.8 lakhs - 4 lakhs

It is taxable on only 0.8 lakhs

Now if we take another example

Here we have assumed that

the GST is 4 lakh here.

Assume the Input GST here would be 5.5 lakhs

This is case one.

This is case two if we consider.

So assume the input GST of the builder would be 5.5 lakhs

How much tax does he have to pay in that case?

He has already paid 5.5 lakhs

Now his output GST is only 4.8 lakhs Rs

How much credit will he get? He will get the maximum credit of 4.8 lakhs

This is credit.

Because the maximum credit that he can get is

the amount which he has collected from you

So this was input tax credit. We have considered both cases.

Now the government says that benefit from the input tax credit

should be passed to the buyer.

So the benefit that he is getting because of the input tax credit

This benefit should be transferred to the buyer by the builder.

Not only builders but it's also said in every case whether it is manufacturing

or any other industry. The benefit from the input tax should be transferred to the buyer

Or builder or any manufacturer

So this is an input tax credit in short

And I think I've covered all the major points

Whatever will be the impact of GST on the real estate

The benefit that you will get as a home buyer

You should know all the information

I have majorly covered all the information

I have tried to cover all the major points in this video

Then also if any point was missing or you want to add something

Or if you have any other suggestions regarding the video or the channel

So please comment below.

Please like and share the video.

I try to share detailed videos about finance and investment

So if you haven't subscribed to the channel yet then subscribe

And press the bell icon

So that you will get the notification of my latest finance video

So let's meet in the next video

Till then keep learning, keep earning

And be happy as always.