GST Impact on Home Loan EMIs

How will GST affect Home Loan EMIs in India?

The Government of India passed the announced the Goods and Service tax (GST) as a sole indirect tax throughout the country which would be a uniform tax. As of the year 2000, goods and services will be taxed at the following rates - 0.25%, 5%, 12%, 18% and 28%. While it still isn't clear on how the GST will impact the market in the near future - if it will be beneficial to the citizens or not, a big question on how it will impact the real estate market has been posed.

With the Prime Minister of the country Narendra Modi having launched the "housing for all campaign", giving people from below the poverty line and low-income families an opportunity to own a house for themselves and the recent slash in home loan interest rates, now is practically the best time for one to avail a home loan. While the prospect of owning a new house seems enticing, the effect of the goods and service tax on the real estate market might hold many customer back.

How the GST will affect the Real Estate Market

GST is not applicable in the case of properties that are ready to occupy while a GST of 12% is applicable in the case of residential properties that are under construction and which have not yet received an Occupancy Certificate (OC). The GST is applicable for charges that are associated with a home loan, including the processing fees. Processing fees are usually in the range of 0.25% to 1% of the home loan amount which will now have the GST also added to it.