Since its implementation on July 1 2017, GST (Goods and Services Tax) has greatly influenced India's real estate sector by replacing multiple indirect taxes and introducing transparency in the taxation process. 

If you are considering purchasing an under-construction property or a flat in Delhi or any other city, ensure you understand all key requirements, documentation, and expenses around your purchase.

Also Read: An Easy-to-Use Calculator To Know Your Home Loan EMI

In this guide, we'll explore how GST affects real estate, the calculation of GST on flat purchases under construction, and the updated property registration charges in Delhi.

Let's dive in!

Relevance of GST on Under-Construction Properties

For under-construction properties, which are still in the process, a GST rate of 18 % is initially imposed, but homebuyers are required to pay a flat 12% of this amount. This reduction is made by assuming that 6% of the value represents the land being transferred.

However, a recent amendment by the GST Council has further decreased the tax rate for under-construction properties from 12% to 5%. Affordable homes enjoy an even lower tax rate of 1%. It is important to note that this reduced rate is applicable only for properties without Input Tax Credit (ITC).

Updated GST Rates on Flat Purchase Under Construction

Given below are the updated GST rates that apply to under-construction properties:

Impact of GST as a Reduced Cost on Affordable Housing

Luxury properties have experienced revised tax rates, with a lowered rate, providing property owners with increased savings. But Affordable housing has particularly benefited from the low tax rate, resulting in reduced costs.

Let's look at the difference in the calculation of GST on flat purchases under construction before and after 2019:

Understanding Property Registration in Delhi

When you purchase property in any state of India, you must register the property in your name on Government’s records and pay the stamp duty charges.

According to the Registration Act of 1908,  the registration charges on real estate differ from state to state and are charged on residential, commercial, leasehold, or freehold property agreements.

Paying the stamp duty ensures that the property documents are legally stamped in your name, quoting that you would be the authentic legal owner of the property.

Stamp Duty Charges in Delhi

When property ownership is transferred from one owner to another, a tax is calculated on the transaction value, which is called stamp duty. The registration charges are generally 1% of the property deal value, while the stamp duty charges depend on various factors like Location of the Property

• Market Value of the

• Property Type

• Gender and Age of the Owner

• Stamp Duty and Property Registration Charges in Delhi

Given below are the property registration charges In Delhi:

Latest Amendments

According to recent updates, transfer duty and stamp duty is more for properties that cost more than Rs. 25 lakhs in Delhi and have increased by 2.5 times in 9 years. Although for women buyers, it is an advantage, as they have to pay less stamp duty.

However, the registration charges remain the same for all genders. Purchasing property in Delhi means you would be liable to pay the stamp duty and registration charges to the Delhi Property and Land Registration Department.

Also Read: What Are The Documents Required For A Mortgage Loan In India?

The good news is that the DORIS Delhi Online Registration Information System website helps you to pay the required registration charges online to save time and inconvenience. This single portal simplifies the process of property registration in Delhi.

Documentation 

In India, the Registration Act of 1908 makes it mandatory to register certain documents, including sale or title deeds, conveyance deeds, lease deeds, gift deeds, and agreements for sale. While purchasing a property, conducting thorough due diligence on the validity of the property’s title is crucial.

Here are some required documents: Mother Deed or Parent Documents

• Building Plan Approval

• Encumbrance Certificate

• Property Tax Receipts

Given below are a few other documents that you, as a buyer, should have ready:

• Two passport-size photographs of the seller and buyer

• Two witnesses

• Proof of identification for all parties involved

• No Objection Certificate, if applicable

• Income Tax Clearance Certificate, if the transaction amount exceeds a certain threshold Permission from the Appropriate Authority, if applicable

Wrapping Up

No matter whether you're planning to purchase a stamp duty on property in delhi or any other city, make sure you're aware of the latest insights about GST on flat purchases and the stamp duty and property registration charges.

Whether it is a ready-to-move-in property or an under-construction property, these charges are vital in all scenarios. So research properly and stay updated to make informed decisions in the long run.