If you are thinking of buying a house, then you may get a big relief in the coming time. The government is preparing to simplify the rules of GST, meanwhile the effect of some possible changes in GST can be seen on the prices of houses.
The government is soon planning a scheme that can make both building and buying a house cheaper. The government is currently considering making the current GST rates simpler and uniform. If this new system is implemented, it will directly benefit those who are planning to buy a house.
Currently, different taxes are levied on the materials used in building a house like cement, steel, tiles, paint etc. Cement and paint are taxed up to 28%, while steel and other materials are taxed at 18%. This increases the cost of the entire project and has a direct impact on the price of the house. If the government makes these tax rates equal and less, then the builder’s cost will be reduced and that benefit can also reach the home buyers.
Impact on affordable housing
Only 1% GST is still levied on affordable homes, so there will be no major change in this. But if ITC is implemented, the builder’s expenses may reduce further, which may provide some relief here as well.
Tax relief amid rising costs
There has been a tremendous increase in the cost of building a house in the last few years. Between 2019 and 2024, construction costs have increased by about 40%. An increase of more than 27% has been seen in just 3 years. In such a situation, if there is a reduction in tax on materials like cement and steel, then both the developer and the buyer can get relief.
The middle class will get the most benefit
For the middle class which is already facing the brunt of inflation, this GST reform will be no less than a relief. Less tax means less cost, and this will have a direct impact on the final price of the house. This can also reduce the burden of EMI a bit.
Luxury homes may be adversely affected
While medium and affordable homes are expected to get relief, the new system may prove to be a bit harmful for luxury projects. If expensive materials like imported fittings, expensive finishing items are put in the 40% tax slab, then builders will either have to increase prices or reduce profits.
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