Property developers are rushing to complete high-end residential projects as buyers prefer ready-to-move-in homes to save on goods and services tax (GST) for under-construction projects.
According to Mint newspaper big and mid-sized real estate firms with healthy credit lines are speeding up construction, particularly for luxury projects, where customers have to shell out an additional 12% GST.
Under the new indirect tax regime, which was implemented last year, under-construction homes attract 12% GST as against 6% tax (service tax plus value-added tax) in the pre-GST era. This is excluding the stamp duty of 5% that has to be paid by customers.
For affordable and low-cost housing, the GST rate is 8%. However, ready apartments with occupation certificates (OCs) are kept out of the purview of GST.