GST

Impact Of GST On Home Loan Market

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A day just doesn’t go by for me without hearing another person bickering about the impact of
GST. The question is do they really know what GST is? Is it good? Or bad? What about the
realtors? What do they think? The point is, we’ll never know. Let us know a little about what
GST is.


GST is an indirect tax system which is governed by the GST council that replaces all the
taxes levied by the central and state governments like excise tax, service tax, customs duty
and VAT. Under GST, the goods are taxed at 0%, 5%, 12% and 18%.

It will be levied with
Central GST by the central government and State GST by that particular state’s government.
Integrated GST would be levied in case of imports or inter-state transactions by the Central
government. The value of GST depends upon the nature of the product.
Let’s look into home loans.

Human beings always want assurance and permanency. A permanent job, house, property,
etc. For us, Life has to go on without any hindrance. It never really differs between people
from any walk of life.

In the case of getting a home, we go through a hundred levels of
processes. We choose the house that we’re going to buy. Ask the bank for a loan and the
process goes on and on . It ends once when all the monthly instalments are paid which
probably might take about 20-25 years.
Generally, getting a home loan isn’t really that big of an issue if you happen to possess the
right documents.

What is so new about it since 1 st July, 2017?
The Goods and Services Tax.
What is it going to do to the buyers? Are the impacts going to be hard? How are the EMI’s
going to be affected?
This new type of indirect tax has its own effects. Let’s list them out.
1) There is no tax levied on the cost of land.
2) The EMIs have become cheaper for the population with home loans for properties
under construction.
3) GST on home loans is going to be 18% across the country.
4) The interest rates on home loans is the same and has very less impact.
5) GST is not effective on fully- constructed properties.


It really does make the answers for our doubts and scepticism easier and simpler. Complete
understanding of GST is easier as the new indirect tax reform and its procedure is clear and
open to discussion.
Especially, when the land tax gets exempted, the GST rate comes down to 12% from its real
18%. The direct impact on the loan payers is that the EMI gets cheaper.
Ultimately, it can be concluded that the impact of GST on the existing loans is almost nothing
and the current impact on home loan EMI seems very slight. Maybe, in the long run, we can
expect the EMIs to become cheaper.

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