1st July 2017, the day when GST came into effect most economists termed it as a transparent and rational approach to enhance the existing transaction symmetry. However, not all the economists were satisfied with the definition. For them, the implementation of GST was yet another addition to the already existing burden. Now, most of you won’t realize the impact of GST on your life without a practical example. Still, in comparison to other loans, Loan Against Property Interest Rates are quite lower. Hence, let us understand how GST is going to affect your life.
Applying for a loan against property is going to get expensive. The applicable tax (GST) on credit schemes - secured and the unsecured loan has been increased by 3 percent. So, if you apply for a loan now, you are going to pay the processing fees as well as 18% of the loan amount as GST.
Moving on, let’s talk about the pre and post GST scenarios:
> Pre GST Scenario: The cost of the property is calculated as per the locality and the construction phase. Therefore, a series of charges were levied on under-construction buildings. Plus, there was stamp duties and registration charges which were collected for ready-to-move apartments.
> Post GST Effects on Loans: As shared above, a person applying for a loan - loan against property, home loan, and even personal loan for that matter becomes liable to pay 18% GST on the loan amount availed. However, as per the Pradhan Mantri Awas Yojana scheme, only 2/3rd of under-construction buildings attract an 18% GST. While the remaining finds its validity as land value, actual tax rate turns out to be 12% excluding stamp duty and registration fees.
Also Read: The GST Effect On Applying Mortgage Loan
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