Impact of gst on real estate CA Manmohan Mahipal M Mahipal & Company Source- IDTC-ICAI

Real Estate Sector in india In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The housing sector alone contributes 5-6 per cent to the country's GDP. The real estate stimulate demand for more than 250 ancillary industries.

Current tax structure on real estate At the time of any real estate transaction, there are several taxes on sale of property. Some of these taxes on sale of property are to be borne by the Buyer and some are borne by the Seller. Moreover, there are some taxes on sale of property which are levied country wide and there are some taxes on sale of property which are levied on specific states only.

SERVICE TAX ON SALE OF PROPERTY If the property that is being sold is an under construction property, Service Tax would also be required to be paid on such property. This Service Tax component is only required to be paid if the property is under construction and not in case of fully constructed properties. The effective rate of Service Tax on property is 4.5% ( Service Tax including KKC+SBC) depending on the size of the property and the transaction value. Service Tax on sale of property is required to be paid by all taxpayers irrespective of the state in which the property is situated. This Service Tax is required to be paid by the Buyer to the Seller who in turn deposits it with the Govt.

VAT ON PROPERTY As VAT is a state level subject, some states levy VAT on sale of under construction property and some states don’t levy any VAT on sale of under construction property. VAT is required to be paid by the Buyer to the Seller who in turn deposits it with the Govt.

STAMP DUTY ON PROPERTY At the time of transfer of title of property and registration with the Govt, stamp duty is required to be paid on property. The rate of stamp duty differs from state to state. Some states also give a concession in case the new owner of property is a female.

Real Estate under GST Sr. No. Nature of Service Rate of GST 19 Construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly. [The value of land is included in the amount charged from the service recipient] With Full ITC but no refund of overflow of ITC 27 Composite supply of Works contract as defined in clause 119 of section 2 of CGST Act 18% With Full ITC

Real Estate under GST – other factors HSN Goods description Rate [2523] Portland cement, aluminous cement, slag cement, super sulphate cement and similar hydraulic cements, whether or not coloured or in the form of clinkers 28% 2515 12 10 2516 Marble and travertine blocks Granite blocks 12% [2515 12 20, 2515 12 90] [2516] Marble and travertine, other than blocks Granite, other than blocks 7324 Sanitary ware and parts thereof of iron and steel 73 7303 Tubes, pipes and hollow profiles, of cast iron. 4. 7304 Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel. 5. 7305 Other tubes and pipes 18%

Thank You CA Manmohan Mahipal M Mahipal & Company Chartered Accountants Email-gstindia.mmc@gmail.com Mobile-9001438000 Source- IDTC-ICAI