GST effect: Pending real estate EMIs to be paid under new tax

Your EMIs of the flats will go up from coming month after the implementation of GST from July. The cost of the flats will also rise with the change in the tax structure. Financial experts inform that currently in the real estate sector when a house is bought by the consumer, they pay service tax of 4.5 per cent. Under GST regime, the real estate sector has been put under 12 per cent bracket.

This means that instead of paying 4.5 per cent tax, the consumer will have to pay 12 per cent which means a rise of 7.5 per cent.

The consumers who do not pay the whole amount together and choose the option of paying it in monthly installment also pay service tax. This will also get converted to GST, informed the experts.

Since the change in tax structure in the EMI’s and costing of the flats will affect a large number of people, Rajasthan Housing Board (RHB) has informed its allottees about the change in tax structure. In a notice issued by housing board, the consumer’s have been informed that from the date of implementation of GST, all the amounts which are due will have to be paid as per the GST law only.

There is yet one more provision under the GST, the penal interest from allottees of housing board will now be charged GST at the rate of 18 per cent, which was not there earlier. All the builders charge 4.5 per cent of service tax and will now switch to 12 per cent tax structure.

Though a section of financial experts are claiming that the GST will bring relief for the real estate sector as many other taxes on the various commodities utilised in the industry will be gone and only one tax will remain.