The one nation and one tax model came into picture on 1st July 2017, which had the sole motive to reduce the tax burden and remove the complex tax structure. The single tax structure created a uniformity regarding the taxes paid and merged all the taxes such as VAT, octroi charges, commercial tax and central excise duty.
The government made sure that it added the provision of the input tax credit as well so that the benefit could be passed to the consumers and the end consumer only has to bear the GST, which eventually would be the last in the supply chain charged. To make sure that the input tax credit was in place, the government insert the anti-profiteering clause in the GST bill under section 171 of the GST law.
Talking about the real estate, earlier the service tax was about 4.5% but post the implementation of the GST the tax levied would be 12%. This might seem to be a bit high in the first place, but it is not the case as there are no hidden or cascading taxes.
The developers will also be able to avail the benefit of the input tax credit, which would eventually make the real estate projects that were launched post 1st July, a bit cheaper when compared to the ones launched before 1st July. However, the 8% stamp duty that was being levied earlier would stay now as well on the registration of the house.
The developers who have their projects midway, i.e., under construction would not be able to claim the benefit of the input tax credit. Thus the developers were seen offering lucrative pre-GST offers and discounts to customers, but the customers were warned against these offers as these were believed to be the ways for builders to stash money and also clear their inventories.
The section 171 mentioned above was introduced for the similar reasons as in that the developers do not snatch in the benefit of the GST from the consumers and thus ensure that it is passed to the end consumer.
Also, there is another side to the story where few experts termed GST as multifaceted and felt it would have a negative impact on the Real-Estate sector. Experts are also of the opinion that the GST implementation is only going to increase the cost of the projects. Confusion is still in the air related to this and experts have different takes on this.
There is also a lot of debate on the different types of housing such as luxury and affordable. The good news is that residential accommodation if rented out would be free from GST. However, if it is rented out for a commercial or industrial purpose and the income exceeds ₹ 20 lakhs, then the GST would be levied.