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The Government of India introduced the Real Estate (Regulation and Development) Act in the year 2016 in a bid to regulate the real estate industry. All the sections of the Act came into force with effect from 1st May, 2017. The key objective of the Act was to bring greater transparency, accountability, financial discipline and speedy dispute redressal for homebuyer and allotees. According to a press release published by the Ministry of Housing & Urban Affairs, a total of 30 states and 28 Union Territories have implemented the Act in India.
Central Business District (CBD) is a commonly used term in commercial real estate to describe an area in the city that contains a high density of commercial, retail and business establishments, as well as government offices. CBDs usually coincide with the city centre and tend to be the central hub for the city�s transportation networks. Nowadays, CBDs have also begun to include entertainment hubs, restaurants, hotels, medical care and residential complexes.
Central Business District (CBD) is a commonly used term in commercial real estate to describe an area in the city that contains a high density of commercial, retail and business establishments, as well as government offices. CBDs usually coincide with the city centre and tend to be the central hub for the city�s transportation networks. Nowadays, CBDs have also begun to include entertainment hubs, restaurants, hotels, medical care and residential complexes.
In India, GST does not apply to home loans. However, a bank provides a host of additional services along with the home loan which are applicable to a charge of 18% GST. Further, processing fees and other charges levied on disbursing home loans fall within the category of financial and related services, as identified by the HSN code 9971, and are therefore subjected to 18% GST. Input tax credit (ITC) can be availed only on properties used for business purposes. Home loans are typically taken for personal home purchase or construction and not for business use, hence ITC cannot be claimed.
A GST-registered landlord is liable to pay 18% GST on commercial rental income if it exceeds 20 lac rupees per annum. The landlord can claim input tax credit (ITC) against GST paid if he meets the eligibility criteria and has maintained adequate documentation to substantiate his claim. GST is not applicable on properties leased out for charitable or religious purposes provided the rental charges are below a specific threshold.
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Under the present GST regime, landlords are not liable to pay GST against their real estate rental income, provided the premises is let out for residential purposes. Rent arising out of a residential property being used for business is however applicable for GST as services are being supplied. In addition, if the rental proceeds of a residential property exceed 20 lac rupees per annum, GST is applicable at the rate of 18%.
In the case of plotted developments, the developer, landowner, or authority undertaking the project must pay GST charges on the sale of developed land within the project. The GST is to be charged on super built-up basis and not the actual measure of the developed plot. Also, any lease, tenancy or right to occupy created for a plot of land is considered to be a provision of services and therefore liable for GST.
Generally speaking, the sale of land is outside the purview of GST as it does not involve the transfer of any good or services. However, in the case of plotted development projects where in addition to the land, basic amenities are provided, GST becomes applicable. This is because the amenities of a plotted development may include the construction of roads, sewerage lines, landscaped gardens, drainage systems, overhead tanks, water harvesting systems, etc. which are construed to be services offered.
Flat owners that pay upwards of INR 7,500 per month in maintenance fees are liable to pay GST at the rate of 18% on the full sum paid. An individual who owns multiple apartments in the same housing society, will be taxed separately for each unit. Housing societies and Residents’ Welfare Associations that collect more than INR 7,500 per unit per month and have an annual turnover exceeding 20 lac rupees must pay 18% GST. These entities are entitled to claim ITC on tax paid by them on capital goods, maintenance and repair services.
GST is applicable on the purchase of under-construction flats, apartments, bungalows, villas, etc in India. As of 1 April 2019, the GST applicable for such properties varies between 1% to 5%, depending upon the size and category of housing. Government led housing projects attract only 1% GST. GST is not applicable on ready-to-move flats that have received an OC certificate or on land deals where not further service is provided.
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