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How to avoid GST on flat purchases | Manglam Radiance

The Goods and Services Tax (GST) that went into effect on July 1, 2017, significantly influences a wide range of enterprises across India. The introduction of the Goods and Services Tax (GST) in India has dramatically reduced the inefficiency of the country’s tax structure. For example, a buyer must pay applicable GST to purchase a property. The GST levied on real estate in India is determined by several factors, including the kind of property being purchased, its market value, whether the home is still being built or has already been finished, and so on. In this blog, We will know about that how to avoid GST on flat purchases with detailed information from scratch to advance.

What is GST for Flat Purchase

The GST substantially influences the real estate market and directly affects purchasers and developers. On the first day of each new fiscal year—April 1, 2017—an announcement is made regarding the standard GST rates that will be in effect. Every year, adjustments are made to the Budget, and those adjustments are then announced. It takes the place of many other taxes, including excise, service, and even VAT. It ensures minimum tax cascading, paving the way for an anti-inflationary approach. The GST on flat purchases depends on the stage of the property. It varies from 1% to 5%.

Is GST Applicable on Flat Purchases

In India, GST is applicable on flat purchases & both flat buyers & builders need to pay the required GST to the Government of India. All new endeavours will be subject to the increased tax rate, which does not include the input tax credit (ITC). The introduction of the GST has made the tax more straightforward; as of right now, it varies from 5% to 18%. When the Goods and Services Tax (GST) is implemented in India in 2023, buyers of condominiums and apartments in developments are still in search of how to skip GST on flat purchases and to prevent other stamp duties.

Nevertheless, builders have until May 20, 2019, to decide whether to use the old or new rates for ongoing projects. Take note that you won’t have to pay the GST if you acquire an apartment in a development that has already been finished.

How to avoid GST on flat purchases?

Tax exemptions, when claimed correctly, have the potential to make a considerable contribution toward alleviating the burden that comes with purchasing a home.

Buyers of projects or properties that are ready to move in only need to pay the stamp duty and registration fees, which amount to approximately 7 to 8 per cent of the total cost of the property. The fact that there is no Goods and Services Tax (GST) to pay on move-in ready flats is one of the most beneficial aspects of making that choice. Ready-to-move-in apartments provide a solid value proposition for anyone interested in purchasing a new home because the buyer is responsible for paying such statutory charges in one lump payment.

Stamp duty is required by law to be paid on the purchase agreement before a real estate transaction can be finalised, and the amount of this obligation varies from one state to the next. The positives include being able to view the natural home they will be residing in and moving into the new home immediately, which results in a reduction in the GST on flat purchases and other stamp duties.

How Can you avoid Gst on Flat Purchases?

You can avoid payment of GST while buying a flat:

a) Purchase a completed and constructed flat

b) Purchase a flat that has an occupancy certified

c) Purchase a second-hand flat

In a scenario where the actual land value is permitted to be deducted from the overall weight, the amount of GST that would need to be paid for building services would be reduced. If you need to know how to avoid GST on flat purchases, the deduction calculated on an actual basis would always be beneficial when the value of land is a proportion of the overall value greater than 33.33 per cent.

In addition, real estate buyers can investigate the possibility of submitting a claim to the GST authorities for a refund of any earlier GST that was recovered in excess.

Is GST applicable to the purchase of a new ready-to-move flat?

No rate of GST applies to completed flats, whether we are talking about apartments or homes that have been constructed. This is because a finished project, such as an apartment or villa ready to be moved into, is neither a good nor a service. Because there is no provision of service, there is no requirement to pay the GST. Instead, it is a piece of real estate that requires a stamp duty payment.  And the same is true for the used apartment: if you purchase a luxury apartment/flat through a resale offer or an apartment that has already been used by someone else, you are not required to pay GST on the purchase of either of these types of flats.