GST doesn’t impact your home loan interest or home loan EMIs. However, it does apply to processing fees and other charges that are imposed on home loans. Earlier, service tax for home loans was charged at 15% and this has now increased to 18% GST. However, only the GST in the case of ready-to-move-in homes is set at 18%.
GST for under construction properties?
For under-construction homes, the GST is 12% and for affordable housing project, it is 8%. Your home loan processing fees, which are usually between 0.25-1% of the loan amount, and will now increase slightly with GST.
For example, say that you’ve take a home loan of Rs. 40 lakh. The processing fee will be between Rs. 10,000 and Rs. 40,000. The earlier service tax of 15% on the processing fee comes to Rs. 1,500 to Rs. 6,000. The total thus comes to between Rs. 11,500 and Rs. 46,000. With GST being charged at 18% on the processing fee, this will come to Rs. 1,800 to Rs. 7,200. The total payable will simply change to somewhere between Rs. 11,800 and Rs. 47,200.
Additional read: Know about tax benefits on home loan