A home of your own is an expensive dream. And yet, we do not stop from dreaming about it and accomplishing it some day. With uncountable deals on home loans and availability of interest rates to choose from, the speed of home-buying today has quickened.

Now, there’s another reason for home-buyers to rejoice - The Goods & Services Tax (GST) Council has reduced the GST rates for under-construction flats to 5% and affordable housing to 1%, with effect from 1st April, 2019. It also increased the carpet area of flats under affordable housing. Currently, GST on all housing projects is 12% and affordable housing projects are taxed at 8%. This GST rate-cut has made home-buying affordable and opened the door of possibilities for home-buyers to fulfil their long-cherished dream.

After the announcement being made on 24th February, 2019, there might be a boost in the sale of residential properties as the lower tax burden on home-buyers will push up demand in the segment which will let developers stay committed to build more affordable homes. The GST Council’s decision will prove to be a benefit for new buyers & also for those buyers who are currently on construction-linked payment schemes. With affordable housing now being defined within Rs 45 lakh budget, more properties qualify for the sweet spot category. The GST cut, coupled with this critical change in definition, will induce more sales in homes falling in this budget range.

Before discussing the impact of the GST on home loan costs, it is crucial to interpret the elements dependent on GST. The most important aspect of taking a home loan is the interest rate on the money which will not change, as service tax or GST doesn’t play a role on it. Likewise, as stamp duty is not subsumed under the GST, stamp duty charged in connection with the documentation of the home loan will not change with the GST.

There’s nothing that will stop a home-buyer to convert the thought of buying a house into action with the GST rate-cut to as low as 1%. Each one is eligible to make the most of this opportunity on purchase of home and move to a new abode of their own.

Additional Read: The impact of GST Rate cut on the housing sector in India

Latest Comments

Leave a Comment

200 Characters

Read Next


What is a credit score (CIBIL score)


How to Make Your Personal Loan Work Harder for You?

If you are expecting some liquidity needs in the near future, ...


Debunking credit card myths

When you start using something new, you could fall into ...

Load More

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.