{"id":26319,"date":"2023-08-28T13:54:25","date_gmt":"2023-08-28T13:54:25","guid":{"rendered":"https:\/\/tata-blog.osian.dev\/blog\/?p=26319"},"modified":"2024-07-02T19:58:07","modified_gmt":"2024-07-02T14:28:07","slug":"how-to-calculate-gst-on-home-loan","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-home\/how-to-calculate-gst-on-home-loan\/","title":{"rendered":"How to Calculate GST on Home Loan"},"content":{"rendered":"\n

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Goods and Services Tax is a comprehensive tax system introduced on July 1, 2017. With this uniform taxation system in place, the real-estate sector has become more transparent in its dealings, leaving a positive impact on potential home buyers.<\/p>\n\n\n\n

That being said, if you’re planning to opt for a loan to buy a house, it is vital to know about the GST applicable on the same. While GST doesn\u2019t directly affect your loan EMIs or home loan interest rates<\/a>, it applies to the processing fee and various other charges on your loan.<\/p>\n\n\n\n

Let\u2019s understand in detail below.<\/p>\n\n\n\n

Impact of GST on housing loan<\/strong><\/h2>\n\n\n\n

To begin with, GST is not applicable on home loan<\/a> taken for ready-to-be-occupied properties. On the other hand, under-construction residential properties and projects that haven\u2019t received the Occupancy Certificate (OC) come with a GST rate of 12%.  Moreover, you have to pay GST on the loan processing fee, which stands anywhere between 0.25% to 1% of the total loan amount.<\/p>\n\n\n\n

Additional Read:<\/strong> How to Calculate GST on Under Construction Property with Examples<\/a><\/p>\n\n\n\n

How to calculate GST on home loan<\/strong><\/h2>\n\n\n\n

The method to calculate GST on housing loans is fairly straightforward. Since it is levied on the processing fee on your housing loan, all you have to do is calculate 18% of the total fee charged to you. While in the case of under-construction property, you have to calculate 12% of the overall processing fee.<\/p>\n\n\n\n

For instance, if you have taken a loan amount of Rs. 50 lakhs, the processing fee will be between Rs. 12,500 to Rs. 50,000. Now, consider a GST rate of 18% on this fee, and it will amount to Rs. 2,250 to Rs. 9000. Therefore, the total amount payable will come somewhere between Rs. 14,750 and Rs. 59,000 on the loan.<\/p>\n\n\n\n

Impact of GST on home loan EMIs<\/strong><\/h2>\n\n\n\n

Since GST is levied on under-construction properties, it will significantly lower the cost of property and lead to lower EMIs for you. While the current standard GST rate on housing loans is 18%, the effective rate comes down to 12%. This is because builders transfer the input tax credit benefits of 6% to the buyer.<\/p>\n\n\n\n

Here are some of the effects of GST on housing loan EMI-<\/p>\n\n\n\n