The term GST is nothing new now. From buying groceries to eating at a restaurant to shopping, the term GST flashes almost everywhere. But, what is GST?
GST, or Goods and Services Tax is an indirect federal tax that is levied on the cost of specified goods and services at the rates specified by the government. It is levied on most goods and services that are sold for domestic consumption. The tax is paid to the government by the businesses that charge such tax on their goods and services from the customer. In short, the GST is paid by the consumer even though it is remitted to the government by the businesses.
GST combined with other direct taxes forms a major part of the government’s revenue. The businesses add the GST on their goods and services while selling them to the consumer and in turn pay the GST portion of it to the government through specified methods. In the case of goods, however, as they are resold, the reseller charges their customer the amount of GST they paid to purchase it and also an additional portion of GST on the cost. Therefore no matter how many times good is resold, the ultimate burden of the tax falls in the lap of the customer.
Most of the countries that have implemented GST have adopted a federal system of taxation. It means that there is a unified rate of tax levied throughout the country and the central taxes get merged with the state taxes. Some examples of such countries are the USA, France, UK. Other countries such as India, Canada and Brazil have adopted a dual taxation system, where the state and the centre charge GST simultaneously.
Some of the changes in real estate after the introduction of GST are:
● GST intends to boom the business in real estate by promoting affordable housing projects.
● The homebuyers shall have to pay 1% GST for affordable housing and 5% for non-affordable housing when buying a property under construction.
● Developable plots also fall under the perimeter of GST.
● However, a finished project that has received a certificate of completion from a competent authority shall not be chargeable under the GST law.
● Before the introduction of GST, several state and federal taxes were levied on the construction of the building and their complexity of them had made it easier for the builder to manipulate the buyer. GST prevents such malpractice.
