From buying the land to selling the house, many types of fees have to be paid. This also includes tax. Know in what form this tax has to be paid
Mumbai : It is everyone’s dream to have their own house. Hearing the burden of tax everyone is afraid to dream. In India, houses are bought by taking long term loans. Tax has to be paid on the purchase of flat, house or land. This also includes GST.
Let us first know about the tax to be paid while buying and constructing a house. Under-construction flats or apartments attract 1% GST for affordable housing and 5% for high-end housing. If there is a ready project, it does not come under the tax net. Affordable homes in metro cities up to Rs 45 lakh and carpet area of 60 sq.m.
GST is also applicable on building materials. The rate varies from 5 to 28% on different items. That is, whether you buy a flat or build a house yourself, you will have to pay tax in both the cases.
States have to pay stamp duty and registration charges while buying property. These rates also differ from state to state. While registering a property in Delhi, men have to pay stamp duty of 6% on the purchase price or the circle rate, whichever is higher. For women, the rate is 4%.
A registration fee of 1 per cent of the circle rate or property price is charged. Apart from this, transfer duty will also have to be paid. In Delhi it is collected through the Municipal Corporation.
Now let’s understand how much money is brought into the exchequer through this. According to a report by property consultant Knight Frank, in 2022, more than 1 lakh 21 thousand residential properties have been registered in Mumbai. Out of this, 8 thousand eight hundred 87 crore rupees have been deposited in the treasury of Maharashtra government as stamp duty and registration fees.
Also, buying a property worth more than Rs 50 lakh has to be deposited to the Income Tax Department as TDS at 1% of the total value of the property. If you are taking a home loan, the bank charges GST on processing fees, technical valuation and legal fees.
After buying a house, property tax has to be paid even while living in it. This includes the use and maintenance of facilities such as roads, sewerage systems, parks, street lights. House tax is not levied in the case of land. Apart from this, tax also has to be paid on water.
If you live in a housing society and pay more than Rs 7,500 as maintenance charges, then
18% GST is applicable.
No tax is left even after selling the house. Capital gains tax is levied after the house is sold. If the house is sold after holding it for 2 years or more, then the profit made is considered as LTCG.
Induction benefit on profits is taxed at 20%. Also the sale of the house at the end of 2 years is considered for short term capital gain tax. This profit is added to the income of the individual and tax is payable on it as per the tax slab. LTCG is waived off on buying a second house within 2 years of selling the house. But if you are building a house, then it should be built within 3 years.
So now you must have understood that one has to pay tax from buying to selling a house. Also, to save tax one has to buy another house or pay tax. Every time the government charges tax for your dream house.
Also, as the property gets old, its value also decreases. So naturally the cost of the old house will be less than the new house.
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