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Press Release / News & Society / Win-Win GST Paves The Easy way to move into Your Dream Abode at The Hemisphere

Win-Win GST Paves The Easy way to move into Your Dream Abode at The Hemisphere

By The Hemisphere on November 06 2017 | 2 Views

As the regime take root, a new era of transparency, clarity and investor confidence is growing. While fly by night operators increasingly flee, the established and organized developers increasingly.

As the regime take root, a new era of transparency, clarity and investor confidence is growing. While fly by night operators increasingly flee, the established and organized developers increasingly find the going easier. The uniformity and regularization is ushering in predictability that is being welcomed. The change in sentiment is sweeping the sector impelling it towards growth and lower prices as all pieces of the picture fall into place. The GST subsumes nearly a dozen of central and state taxes, and eliminates all the complex and ambiguous tax structure that had been plaguing the country. A single indirect tax-structure regime not only makes tax collection seamless across India but affords simplicity and predictability to all. With the Union government fixing 18% GST rate for under-construction properties with full Input Tax Credits (ITC) for the real estate sector but excluding the cost of land, the advantage - even if it does not lead to immediate lowering of prices- is enormous.

GST, or goods and services tax, subsumes nearly a dozen of central and state taxes, including excise duty, value-added tax (VAT) and service tax. To ensure that developers pass on the benefit to the final customer, the government has included an anti-profiteering clause in GST law. It is now mandatory to pass on the benefit of tax reduction due to input tax credit to the final customer. One of the significant changes in GST is input tax credit, where credits of input taxes paid at each stage of production or service delivery can be availed in the succeeding stages of value addition, thus helping eliminate "tax on tax".

The implementation of GST has already led to sentiment boost property buyers though there could be short-term challenges for developers in transitioning to the new tax regime. GST may not be instrumental in bringing down the prices of residential real estate over the very short term. However, it benefits all the stakeholders of the residential real estate sector, as the perception of the sector improves on the back of a simplified tax structure. GST is definitely positive for the sector in the medium to long-term, with property prices likely to soften by 1-3 per cent. Impact could vary depending on extent of input credit transferred, cost structure and property completion status.

According to the earlier taxation system, development and sale of property attracts multitude of state and central taxes. For the buyer, taxes applicable and their percentage used to vary depending on construction status of property (under-construction versus complete) and the state in which the property was located. In case of purchase of an under-construction property, a buyer was subjected to payment of VAT, service tax, stamp duty and registration charges, whereas in case of purchase of completed asset, only stamp duty and registration charges were payable (VAT and service tax are exempt). Applicable rates for VAT, stamp duty and registration charges, all being state levies, were specified by each state. Service tax, a central levy, is charged on construction cost and effective service tax paid by customer was around 3.8-4.5% on sale agreement value (ex-taxes). Thus it was extremely difficult for buyers to ascertain what components are included for calculation of VAT and service tax.

However, under the GST regime, all under-construction properties are charged at 12 per cent on property value (excluding stamp duty and registration charges), though it will not apply to completed and ready-to-move-in projects, as there are no indirect taxes applicable in the sale of such properties. In case of under-construction properties, levy of stamp duty and registration charges on the buyer will continue. A simple and transparent tax regime applied on the purchase price under GST is thus the biggest takeaway for property buyers. Also, a developer could avail input tax credit on sale of under-construction property (not allowed for completed property) against taxes paid by the property buyer, depending on applicable rules. VAT (with rates differing from one state to another) and service tax together account for 7-9 per cent of the ticket price for a residential property, which is 3-4 per cent lower than the GST rate, was seemingly cheaper. But the builder must pass on the benefit of the price reduction he enjoys due to input tax credit to the buyer, so eventually the rates will become cheaper.

Developers will also be benefited. Under the previous tax regime, a property developer was subject to central excise duty, VAT and entry taxes (levied by state) on construction material cost. On the services used (labor charges, architect fees, approval charges, legal fees, etc.), developers paid service tax of 15 per cent. Real estate developers used to grapple with the challenges of multiple-taxation and the cumulative burden eventually used to be passed on to the buyer. While major construction materials have not seen a significant change in tax rate under the GST regime but lower transportation and logistics costs under GST will reduce overall cost. GST will eliminate all the other taxes, and the benefit of being able to claim input tax credit can also improve developers’ profit margins. Developers too will find the GST regime much simpler to work with, with the benefit of input tax credit being an added advantage. The new Goods and Services Tax regime charges under-construction properties at 12% with reduces logistic costs. It also provides for a simplified tax structure for buyers and input tax credits that allow builders to increase profit margins as well as transfer benefits of the same to buyers.

GST is expected to be a sentiment booster for the entire industry as well and will act to revive buyer and investor interest by bringing more transparency in taxation. As the perception of the sector improves, the prices are likely to drop around one to three per cent. The taxation earlier was too complicated for buyers, the improved transparency and clarity will help. For instance, buyers were earlier liable to pay taxes depending on the construction status of the property and the state where it is located. Buyers also had to pay VAT, service tax, and stamp duty and registration charges on purchase of an under-construction property. However, if the purchase was for a completed property, the tax applicable were stamp duty and registration charge. Furthermore, since VAT, stamp duty and registration charges were state levies, each state specified its own figures. Service tax was a central levy and was charged on construction. So the calculation of taxes was very tedious in the earlier regime. GST charges all under-construction properties at 12 per cent of the property value. This excludes stamp duty and registration charges. No indirect tax is applicable on sale of ready-to-move-in properties hence the tax will not apply to those. The biggest takeaway is that GST is a simplification of tax that applies to the overall purchase price. It benefits all - from buyers, developers to investors.

One of the best options post GST is to possess your dream home in Greater Noida where our suggestion is the Hemisphere due to its multiple advantages.

The Hemisphere is poised to add premium sheen to it with its golf themed living splendor. We are proud to present to you The Hemisphere, fine luxury villa living, spread over a 100 acre site. Nestled in the City Centre of Greater Noida, The Hemisphere boasts of an advantageous location. The private residences of this exclusive community encircle a 9-hole golf course and other equally lavish lifestyle features.

Inspired by the very best from the world, The Hemisphere Golf Villas provide a million ways to experience the luxury living. These worlds’ finest luxury villas are the perfect amalgamation of sheer luxury & suburban lifestyle and have the multiple luxury clubs, a full- fledged sports complex, a wellness center, banquet halls, orchards, hi tech cloud based security and more. These exquisite villas are meticulously crafted hence define elegance & class and offer all the residents the taste of luxury villa living.

A life well lived needs to be elevated to an exquisite living style. Where your passions flow and immerse in the playground of life. Each action enhanced to a 360 degree vision. Of a life of living luxury, with every amenity & facility conceivable at hand. Yet tightly embraced in greens. A placid certitude of sustainable living ensuring peace of mind-always!

Your search leads to Greater Noida villas. Where connectivity reaches out, to bring the Capital and NCR closer. Greens bloom and Pollution stays away. A planned sub city of ample spaces that allows a life you choose. And then settle yourself in a luxury villa in Greater NOIDA.

Nestling here, at THE HEMISPHERE, choose a life embedded in haute living even as you ensconce yourself in the greens. Amongst all the villas in Greater Noida, it’s centrally located and well connected to offices, children’s education, dining, partying holes & entertainment hubs of Delhi-NCR by the Metro, Road and Air. The 100 acres golf residence villas project property offers a 9-hole golf course in its span. Amidst expanses of greenery. And an embedded green construction that allows you to revel & celebrate a sustainable life. All that you can think of in terms of facilities are at a short distance in this golf residence villas. And also something you wish – crème de la crème community – wedded to a golfing high-living!



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