Choosing the right property to invest in is a major decision. With the Indian real estate market booming, it’s essential to weigh the pros and cons of under construction and ready-to-move properties. Let’s delve into the key factors to consider:
Under Construction Properties:
Pros:
- Lower Prices: Under construction properties often come with lower initial costs, making them an attractive option for first-time homebuyers.
- Potential for Appreciation: As the property develops, its value tends to increase, offering potential for significant returns on investment.
- Customization: In some cases, you may have the opportunity to customize certain aspects of your home, such as flooring or paint colors.
Cons:
- Delayed Possession: One of the major drawbacks of under construction properties is the uncertainty around possession dates. Delays can occur due to various factors, such as construction challenges or regulatory hurdles.
- Construction Quality Concerns: There’s always a risk of construction quality issues, which can lead to additional costs and headaches.
- Home Loan Disbursement Process: The home loan disbursement process for under construction properties is often staggered, with funds released in installments as the construction progresses. This can be a complex process.
How to Calculate GST on Under Construction Property
Understanding GST on Under Construction Properties
In India, under construction properties are subject to Goods and Services Tax (GST). However, the calculation and payment of GST can be a bit complex.
Key Points to Remember:
- GST Rate: The standard GST rate applicable to under construction properties is 18%.
- Buyer’s Contribution: The buyer is responsible for paying 12% of the GST amount.
- Developer’s Input Tax Credit (ITC): The remaining 6% of the GST is claimed by the developer as ITC.
Example:
Let’s say you’re purchasing an under construction property worth Rs. 50 lakhs.
- Calculate 18% GST:
- 18% of Rs. 50 lakhs = Rs. 9 lakhs.
- Buyer’s Share:
- 12% of Rs. 9 lakhs = Rs. 1.08 lakhs.
So, you, as the buyer, will need to pay Rs. 1.08 lakhs as GST.
Important Note:
- State-Specific Rules: It’s essential to check with local authorities and real estate experts, as there might be state-specific rules and regulations that could impact the GST calculation.
- Consult with a Tax Professional: For accurate calculations and to understand the latest tax implications, it’s advisable to consult with a qualified tax professional.
Under Construction Property Tax Benefit:
Under Section 80C of the Income Tax Act, you can claim a tax deduction of up to Rs. 1.5 lakh on home loan principal repayment. This benefit is applicable to both under construction and ready-to-move properties.
Ready-to-Move Properties:
Pros:
- Immediate Possession: One of the biggest advantages of ready-to-move properties is that you can move in immediately, avoiding the hassles of construction delays.
- Assured Quality: You can physically inspect the property to assess its quality and finish.
- Simplified Home Loan Process: The home loan process for ready-to-move properties is generally simpler and quicker.
Cons:
- Higher Prices: Ready-to-move properties tend to be more expensive compared to under construction ones.
- Limited Customization Options: You may have limited options for customization, as the property is already built.
Home Loan for Ready-to-Move Property:
Securing a home loan for a ready-to-move property is relatively straightforward. Lenders typically offer competitive interest rates and flexible repayment terms.
Making the Right Choice
The decision between under construction properties and ready-to-move properties depends on your individual circumstances, risk tolerance, and financial goals. If you’re comfortable with uncertainty and are looking for potential long-term gains, an under construction property might be a good option. However, if you prioritize immediate possession and peace of mind, a ready-to-move property is the way to go.
Consider TPV Vishwakarma
If you’re looking for move-in ready homes in Navi Mumbai, consider exploring the offerings from TPV Vishwakarma, a renowned real estate developer. They offer a range of high-quality, affordable homes that cater to diverse needs.
Use TPV’s Home Loan Calculator
To plan your home loan effectively, use TPV’s Home Loan Calculator. This tool helps you estimate your monthly EMI, interest payable, and total cost of the loan.
By carefully considering these factors and seeking expert advice, you can make an informed decision that aligns with your lifestyle and financial objectives.
