- GST (Goods and Service Tax)
- Registration Tax
- Stamp duty
- TDS (Tax Deduction at Source).
With the implementation of GST, other indirect taxes such as VAT (Value Added Tax), Service Tax, and others were replaced by this single unified tax system. According to the 33rd GST Council Meeting which was held on February 24, 2019, 5% GST should be charged without Input Tax Credit on residential properties that are not part of the affordable housing segment, while 1% GST should be charged without Input Tax Credit that is included in the affordable housing segment. Notably, GST Tax payment is not applicable to the sale of completed properties.
For ready to move in apartments, three types of taxes could be applicable, which are TDS, Registration Tax, and Stamp Duty. TDS on purchase of the property was imposed from July 1, 2013, under section 194IA of the Income Tax Act.
According to this rule, TDS must be deducted at 1 per cent if the value of the property exceeds Rs.50 lakhs. TDS is deducted at the time of crediting money to the seller’s account, or if the payment is made through the bank then, the buyer must inform the bank to deduct the necessary TDS to avoid any penalties.
The registration process is necessary to record the sale documents with the Registration Officer. Under Section 17 of the Indian Registration Act, 1908, registering the document for sale, lease or transfer of the property is mandatory. The local government generally decides the registration percentage of a property and can vary from state to state. E.g., In Mumbai, the registration fee is charged at 1% of the agreement value of Rs 30,000, which is less.
Stamp duty for your property is levied by the state government on the documents that you need to register your property. The stamp duty is typically 5 per cent of the total market value and can vary according to the states. The stamp duty that you are required to pay will also vary based on the age of the property, location, amenities, age of the buyer, and purpose. The buyer is required to pay the amount before registration.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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