The introduction of Goods and Services Tax (GST) has had a significant impact on the real estate industry in India. GST is a tax that is levied on the supply of goods and services and is applicable to all stages of the supply chain. With the introduction of GST, the process of sale of land after levelling, laying down of drainage lines, and other such activities has also been affected.
When it comes to the sale of land, GST is applicable only if the land is being sold after levelling, laying down of drainage lines, and other such activities. This means that if the land is being sold in its natural or undeveloped state, then GST is not applicable. However, if any development activities have been carried out on the land before the sale, then GST will be applicable.
The rate of GST on the sale of land after development activities such as levelling and laying down of drainage lines is 18%. However, it is important to note that the GST is calculated only on the value of the development activities carried out on the land and not on the entire value of the land. The value of the land is determined based on the circle rate or the guidance value of the land as determined by the government.
If the value of the land is not known, then the GST will be calculated on the entire value of the sale. For example, if the land is being sold for Rs. 1 crore and the value of the development activities carried out on the land is Rs. 20 lakhs, then the GST will be calculated only on the value of the development activities (i.e., 18% of Rs. 20 lakhs) and not on the entire value of the sale.
The introduction of GST has made the process of sale of land more transparent and streamlined. The GST regime has eliminated the multiple taxes that were applicable earlier, such as VAT, service tax, and excise duty. This has resulted in a reduction in the overall tax burden on the buyers and sellers.
However, the implementation of GST has also led to an increase in the cost of land as the GST rate of 18% is significantly higher than the earlier tax rates. This has had an impact on the real estate industry, especially for small and medium-sized businesses and startup founders who are looking to purchase land for their business operations.
The GST on sale of land after levelling, laying down of drainage lines, and other such activities has made the process of sale of land more transparent and streamlined. While the implementation of GST has resulted in an increase in the overall tax burden on the buyers and sellers, it has also eliminated the multiple taxes that were applicable earlier. The impact of GST on the real estate industry is still being studied, and it remains to be seen how it will affect the industry in the long run.
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