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Land constitutes of all things permanently attached to the surface of the earth such as ground, trees, wells, rivers. etc. It is a natural resource that is the centre of all economic activities. Therefore, land is classified on the basis of its economic use, i.e., agricultural land, non-agricultural land and forest land.
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 the GST charges on the sale of the 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 system, 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 as well as maintenance and repair services.
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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% without ITC and between 8% to 12% with ITC, 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.
Input tax credit (ITC) refers to a mechanism wherein credit can be claimed on account of GST paid on the purchase of goods and services used for the furtherance of business. This mechanism is available to businesses registered under the GST Act, including manufacturers, suppliers, e-commerce operations and others specified in the legislation. It aims to assist businesses in effectively reducing their tax liability while encouraging compliance and preventing double taxation.
GST stands for Goods and Services Tax. It is an indirect tax levied on the supply of certain goods and services and is applicable across India. In real estate, GST is applicable on the procurement of construction material and the service of construction. Therefore, a buyer of an under-construction flat must pay GST, as the builder continues to provide a service until the flat is ready. GST is not applicable on ready flats which have received an OC certificate or land transactions as there is no additional service provided by the builder or seller post the transaction.
Housing units in metropolitan cities such as Delhi-National Capital Region, Bengaluru, Chennai, Hyderabad, Mumbai-Mumbai Metropolitan Region, and Kolkata, that are worth up to 45lac rupees and measure up to 60 sq. m of carpet area are considered as affordable housing units. A housing unit in any Indian city other than the ones listed above qualifies as an affordable house if it costs up to 45lac rupees and has up to 90 sq. m of carpet area.
The Pradhan Mantri Awas Yojana is a housing initiative by the central government launched in 2015 with the aim to provide 'Housing for All' by 2022. It is divided into two parts; PMAY- Urban and PMAY-Gramin catering to urban and rural housing respectively. PMAY-U aims to construct 20 million houses for EWS and LIG groups in urban areas via promotion of in-situ slum redevelopment, subsidies to private companies for construction of affordable housing projects and a Credit Linked Subsidy Scheme (CLSS) for home loans availed by EWS, LIG and MIG groups. PMAY - G aims to provide a 'pucca' house, with basic amenities like piped drinking water, electricity connection, and Liquefied Petroleum Gas (LPG) connection through various state run scheme.
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