What would be the impact on EMIs on home loan due to the GST?


GST is applicable on financial services at the rate of 18 per cent due to which home loan processing charges increase under the GST regime.

Do buyers need to pay tax on the entire home loan amount, even in cases where only part of the EMIs are due?

No. At the time of receipt of the payment or issue of the demand letter for payment, the relevant tax would have been incorporated by the developer.

Will the GST impact the stamp duty on buying a property? What about registration charges, maintenance charges, etc.?

Apartment owners will have to pay about 2.5% additional tax on the maintenance charges. This tax will be applicable on flat owners who pay maintenance charges of above Rs 5,000, excluding property tax, stamp duty, water charges and electricity charges.

Will under-construction properties will be costlier as compared to ready-to-move-in properties?

Yes. This is because GST at the rate of 12 per cent shall be levied on under construction properties, where the completion or first occupancy certificate has not been received.

Will resale properties become costlier under the GST?

There will be no impact on resale properties. A resale property is an immovable property. Thus, it is not covered under the definition of ‘goods’ under the GST regime.

What are the objectives of RERA, 2016?

There are five major objectives of RERA, 2016.

  • To establish the Real Estate Regulatory Authority (RERA)
  • To encourage transparency and efficiency in the sale of real estate projects
  • To protect consumer’s interest in the real estate sector
  • To establish a ruling mechanism for speedy dispute settlement
  • To set up an Appellate Tribunal to hear appeals from the decisions, directions or orders of the RERA

Is the RERA Act applicable to both residential and commercial projects?

Initially, the bill was supposed to cover only residential projects. On further amendments, commercial projects including offices, shops, and buildings were also included.

Are there any supporting government bodies set up to assist the RERA?

Yes, a Central Advisory council will be set up to advice the Central Government on the implications of the Act to recommend policies in order to protect consumers’ interest and to supervise the growth & development of the real estate sector. In addition, there will be a dedicated Appellate Tribunal set up for RERAs to hear appeals from orders of the RERAs and the adjudicating officer.

How will the project be completed if the real estate developer is revoked after the registration of the project?

In that case, the RERA can consult the Government to employ a competent authority to complete the project.

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