Since the inception of GST in 2017, we have seen many amendments in the bill. The introduction of Goods and Services Tax was with the aim to offer a uniform tax payment regime to the consumers. The initial impact of GST was at a higher side in the real estate industry however, over the period of time, this has significantly changed. At the moment, the interest rates are lower and availing loans at a lower interest rate has become easier. In this answer, I will talk about the impact of GST on home loan and home loan GST rates as well.
What was the earlier norm?
We need to understand first that there were many taxes which were levied before the commencement of GST. The consumer had to pay state taxes, service tax, VAT, central excise, etc. especially on home loan, the service tax was levied at the rate of 15% and other taxes were applicable as well.
Home loan GST rate
Now that we know what was the earlier arrangement around home loan and taxes, let us look at GST on home loan. You should know that GST is applicable on home loan processing fee.
Banks usually levy a processing fee of 0.25% to 1% of the loan amount. On this processing fee, the GST would be applicable at the rate of 18%.
Let us understand this with an example:
Assuming you get a home loan of Rs. 30 lakhs and the processing fee is 0.75% then here is how the taxes would look like:
Service tax before implementation of GST= Processing fee x 15%
Service tax before implementation of GST = 22500 x 15%
Service tax before implementation of GST = Rs. 3375
GST on Processing fee = processing fee x 18%
GST on Processing fee = 22500 x 18%
GST on processing fee = Rs. 4050
I hope this makes the concept of GST on home loan clear.
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Authors Of The Question
How much GST on home loan is applicable?
Ashok
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1 Answers
3 Year
2021-08-11T12:05:16+00:00 2021-08-11T13:57:04+00:00Comment
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