You may have chosen your dream home, construction of which is finished, and may be getting ready to make payment and get it registered. You may have even started making the list of guests and relatives to invite them for the house warming ceremony as the home loan has been sanctioned.
But wait. First check if the completion certificate has been issued or not. If you buy the property before issuance of the completion certificate, you will have to shell out 12 per cent more to pay the Goods and Services Tax (GST). So, in case the cost of property is Rs 50 lakh, you will have to pay Rs 6 lakh more to the government as GST.
So, don’t just get excited by the super finishing with hi-class fittings and fixtures of the flat, but check if the completion certificate has been issued and the flat is occupancy-ready or not. It is very important, because a recent GST announcement stated that no tax is applicable only on ready-to-move-in flats wherein sales took place after the issue of completion certificate.
The Finance Ministry, on December 8, 2018, issued a clarification, saying the Goods and Services Tax (GST) will be applicable on sale of under-construction property or ready-to-move-in flats, where the completion certificate is not issued at the time of sale.
Buyers had significant choices until now, as all properties that were treated as ready-to-move-in were out of the tax ambit, but after this announcement, such projects, which do not have completion certificates, will attract GST.
So, either you have to request the bank to enhance the loan or arrange for the money to pay that few lakhs of rupees to pay the GST, unless the flat you intend to buy has got completion certificate and is occupancy-ready.
You can’t expect the builder to help out, as developers, who were already struggling with huge unsold inventory, have got further jolted by the sudden NBFC crisis and fund-raising became a major headache for them along with the concern of selling the unsold properties to generate cash flows.
While it would push the developers of new flats into further trouble, the new announcement would boost the secondary property market, as such properties are by definition complete and are exempt from GST.
So, to save on 12 per cent GST, you may try to get a flat that has been put up for resale.