When you are buying a residential property, you may hear terms such as carpet area, built-up area, and super built-up area. These terms describe the size of an apartment. Understanding these differences can help you make an informed decision about whether a particular property is right for you. This short video will help you understand the differences between these terms.
There have been some changes as the internal walls were not included in the carpet area but after RERA, these walls which divide the room are included in this term. Though Load-bearing walls are not included in carpet area calculations.
When you go to buy a property, you may hear the term carpet area, built-up area, super built-up area, and so on. This can be confusing for many buyers. Propertywala has put together this handy guide with definitions of these terms.
CARPET AREA – A carpet area in simple words is the area where we can lay our carpet. It is an area in between external walls; it includes rooms, a kitchen, a toilet, a bathroom, and a staircase within the unit. Balconies, service shafts, and common areas are excluded from the carpet area. There have been some changes in the carpet area after RERA (REAL ESTATE REGULATIONS AND DEVELOPMENT ACT) came into effect in 2016. The internal walls were not included earlier under the carpet area but now after RERA, the walls which are used to divide the room are included in this term.
Next, there is some point to be noted for the buyers—before purchasing a property—to see the exact carpet area in the approved layout. This can help you understand how much carpeting will be included in your new home. So, before buying a property, ask your builder about the approved layout. And next is to compare two properties based on carpet area only for a clear understanding of the rate.
The formula for calculating carpet area is – The total area of the inner wall and floor is the carpet area.
BUILT-UP AREA – Now we will discuss the meaning of the Built-up area. The built-up area refers to the entire area covered by carpet plus inside weight-bearing walls and outside walls if any. In short, included areas are external walls, attached balconies, verandahs, a service shaft area, and a servant room. Excluded areas are terraces, and common areas like lifts and stairs, etc.
Walls adjoining other apartments will be factored in at 50% of your apartment’s build-up area. Built up area generally is approx 10% higher than the carpet area.
SUPER BUILT-UP AREA – When you purchase a property, you will hear about the term “super built-up area”. It means the build-up area of a flat and pro rata common area. For example, the total common space is 8000 sq feet among 8 flats in a complex, so the pro rata common area of a single apartment will be 1000 sq feet. Therefore, the common area includes built-up space like a lobby, lift shafts, staircases, pipe ducts, air ducts, and other covered common facilities. And the area which is not included in the common area is the roof terrace and open areas like parks and play areas as well as driveways. The approximately super built-up area is 25% higher as compared to the carpet area. Generally, it varies from 20% to 40% of the carpet area.
To convert the super built-up area into carpet area, calculate the loading factor, and subtract that from the Super built-up area.
LOADING FACTOR – The difference between the super built-up area and the carpeted area is referred to as the loading factor.
For your information, section 61 of the Real Estate Regulatory Authority Act (RERA) stipulates that promoters can be fined up to 5 percent of the total cost of the real estate project for giving false information or selling on the super area. It should be sold in the carpet area.
In 2000, the late Atal Bihari Vajpayee, the then prime minister of India, initiate a committee to draft new indirect tax law and i.e. GST which stands for Goods and Services Tax. It was launched to replace multiple indirect taxes in India. Such as excise duty, value-added tax (VAT), services tax, purchase tax, octroi, entry tax, luxury tax, and so on. Here, propertywala brings every fact and figure that you should know about GST in real estate.
DEFINITION:
The Goods and Service Tax Act was driven in Parliament on 29th March 2017 but it came into effect on 1st July 2017. It is the only tax that applies all over India and imposes on the supply of certain goods and services. However, GST does not replace customs duty, which is still required on imported goods and services. Different categories of products and services attract different tax rates under GST.
Now, we will go ahead with the GST regime which is given by our Honorable Prime Minister Shri Narendra Modi, In his words, the Goods and Services Tax (GST) is “a path-breaking legislation for New India”. Then, GST is not just a tax reform but a milestone in realizing Sardar Vallabhbhai Patel’s dream of building ‘Ek Bharat – Shrestha Bharat’.
GST APPLICABILITY IN REAL ESTATE:
APPLICABLE –
1. It is applicable to under-constructed flats only. 2. It is because the GST does not cover the real estate sector under its range. Therefore, the tax rate applicable on a property is charged under ‘work contracts.
NOT APPLICABLE –
1. GST does not apply to ready-to-move-in flats, plots, and lands. 2. Upon completion and receiving the occupancy certificate i.e.(OC), the property is categorized as ready to move in. That is why a developer cannot charge GST on selling ready-to-move-in homes.
GST RATE ON REAL ESTATE 2022:
Everyone has a dream of a house. Well! It is fine if you are planning to buy a property. Because buying the right property is one of the biggest achievements in life. So, home buyers in India have to pay GST on the purchase of under-construction properties such as flats, apartments, and bungalows. Before hurrying on to the process, the foremost thing you must ask yourself is,“what is the GST rate on real estate?”
PROPERTY TYPE
GST RATE FROM APRIL 2019
Affordable housing
1% without ITC (Input Tax Credit)
Non-affordable housing
5% without ITC
According to the table, if the property is affordable, the GST rate from April 2019 is only 1% without ITC. Also, for non-affordable housing, the GST rate is 5% without ITC.
WHAT IS ITC?
Input Tax Credit refers to the tax already paid by a person on any purchase of goods and/or services that are used or may use for business. Therefore, it is available as a deduction from tax payable.
AFFORDABLE HOUSING AS PER GST:
According to government norms, housing units worth up to Rs 45 lakhs are referred to as affordable housing in metro cities in which carpet area measures up to 60 sq. meters. The Delhi-National Capital Region, Bengaluru, Chennai, Hyderabad, the Mumbai-Kolkata are categorized as metropolitan regions. A housing unit in non-metro cities barring to be an affordable house, if it costs up to Rs 45 lakhs and has a carpet area of up to 90 square meters as mentioned in the given table.
CITIES
PRICE
Carpet AREA (SQ/M)
METROS
up to Rs. 45 lakhs
60 sq./m
NON- METROS
below Rs.45
90 sq./m
SOME FACTS TO BE NOTED WHEN CONSIDERING GST IN REAL ESTATE:
It does not subsume the stamp duty and registration charges, which you still have to pay.
Seller increases the cost of ready-to-move-in properties to factor in the GST cost. So, overall the under-constructed properties are still cheaper than ready-to-move-in properties.
That’s all you need to know about GST when it comes to real estate.
When you go to buy a property, you may hear the term carpet area, built-up area, super built-up areas, and so on. This can be confusing for many buyers. Propertywala has put together this handy guide with definitions of these terms.
CARPET AREA
A carpet area in simple words is the area where we can lay our carpet. It is an area in between external walls; it includes rooms, a kitchen, a toilet, a bathroom, and a staircase within the unit. The carpet area excludes balconies, service shafts and common areas. There have been some changes in the carpet area after RERA (REAL ESTATE REGULATIONS AND DEVELOPMENT ACT) came into effect in 2016. The internal walls of a building were not included under the carpet area in earlier versions of RERA, but they are now.
Next, it is important for buyers to determine the carpet area in an approved layout before making a purchase. This can help you understand how much carpeting will be included in your new home. So, before buying a property, ask your builder about the approved layout. And next is to compare two properties based on carpet area only for a clear understanding of the rate.
FORMULA TO CALCULATE THE CARPET AREA
The total area of the inner wall and floor is the carpet area.
BUILD-UP AREA
The built-up area refers to the entire area covered by carpet plus inside weight-bearing walls and outside walls if any. The term included areas that refer to external walls, attached balconies, verandahs, a service shaft area, and a servant room. Excluded areas are terraces, and common areas like lifts and stairs, etc. The walls of adjoining apartments will be factored into the building of your apartment at 50% of its build-up area. Built up area generally is approx. 10% higher than the carpet area.
FORMULA TO CALCULATE THE BUILD-UP AREA
The built-up area of a building is the total floor space, including carpeting, walls and balconies.
SUPER BUILD-UP AREA
When you purchase a property, you will hear about the term “super built-up area”. It means the build-up area of a flat and pro rata common area. For example, the total common space is 8000 sq feet among 8 flats in a complex, so the pro rata common area of a single apartment will be 1000 sq feet. Therefore, the common area includes built-up space like a lobby, lift shafts, staircases, pipe ducts, air ducts, and other covered common facilities. And the area which is not included in the common area is the roof terrace and open areas like parks and play areas as well as driveways. The approximately super built-up area is 25% higher as compared to the carpet area. Generally, it varies from 20% to 40% of the carpet area.
FORMULA TO CALCULATE THE SUPER BUILD-UP AREA
To convert the super built-up area into carpet area, calculate the loading factor, and subtract that from the Super built-up area.
LOADING FACTOR
The difference between the super built-up area and the carpeted area is referred to as the loading factor.
Therefore; Carpet area * (1- loading factor) = Super Built-up area
CALCULATION EXAMPLE OF SUPER BUILD-UP AREA
Let’s assume, the super built-up area of an apartment is 1,200 sq. ft. and the carpet area is 1,000 sq. ft.
1,000 X (1-loading factor) = 1,200
1- loading factor = 1,200/1,000
1- loading factor = 1.2
Loading factor = 1.2 – 1
So, the answer is 0.2 or 20%. As a standard, It is always in percentage.
IMPORTANT FACT TO KNOW BEFORE PURCHASING A PROPERTY
For your information, section 61 of the Real Estate Regulatory Authority Act (RERA) stipulates that promoters can be fined up to 5% of the total cost of the real estate project for giving false information or selling on the super area. It should be sold in the carpet area.
When you start your property search, you will be amazed by the extra charges involved in buying a house or investing in property.There are two options: buying a ready-to-move-in property or an under-construction property. However, most people prefer to buy a ready-to-move-in property because it is less risky than an under-construction one. So, let’s assume that a property is coated at Rs. 3000 per square feet—this is its basic rate—but there are also other charges on top of that which people often fail to consider and which can be more than 40% to 50%. Let’s discuss all the additional charges so that you can make an informed decision about the total price of any given property before agreeing to purchase it.
Let’s look at an example:
Suppose a property’s basic price rate is Rs. 45 lakhs. When we make the final payment for this property, it will be around Rs. 58 – 67.5 lakhs—which includes the basic price of the property and the extra other charges when you buying a house. We will discuss all these charges in detail below:
First comes the basic charge. It is the charge excluding all the extra charges. Before RERA Act came into force, properties used to be sold on the super built-up areas; after the enactment of the RERA Act, properties are supposed to be sold based on the carpet area. For example, if the property has a carpet area of 1500 square feet and the rate per square feet is Rs. 3000, then its total basic cost would be Rs. 45 lakh. And this is just the basic cost; you will also have to pay multiple charges on it, as mentioned below.
PLC (PREFERENTIAL LOCATION CHARGES) –
Property taxes are charged according to the property’s location. Like; a corner flat, park-facing, sea-facing, lower floors, or higher floors. For example, sea-facing view residences have higher PLC charges than non-sea-facing. Therefore, if you own any such property there is a PLC charge coated. Generally, PLC charges are Rs 150-200 per square feet.
PARKING CHARGES –
When you purchase a property, you will pay a parking fee of 5-7% of the base price of the flat. For example, if you purchase a property for Rs. 45 lakhs, you will be charged Rs. 2 to 2.5 lakhs for the parking facility.
INFRASTRUCTURE DEVELOPMENT CHARGES (IDC) –
An infrastructure charge usually consists of complete internal infrastructure within a complex. For example, water and electricity supply, as well as sewage treatment plants may be charged separately. Developers usually charge these services together because it costs less to do so. However, if we add them together in one place according to IDC’s input-demand curve, there will be an IDC charge added at around 6% of the base price of the flat or house.
EXTERNAL DEVELOPMENT CHARGES (EDC) –
In some cities, there is also an external development charge. For example, in Gurgaon and Faridabad. This charge goes to the government and includes the infrastructure of a complex—for instance; road facilities, sewage, water, and electricity. The EDC charges are applied to all these expenses so it is approx. 5% of the base price of a flat. The total cost of IDC and EDC ranges from Rs. 300 to 400 per square foot.
CORPUS FUND/ IFMS –
Builders collect corpus funds, also called IFMS. It is interest-free maintenance security, similar to an emergency fund, and not like regular monthly maintenance. To purchase a property costing Rs. 45 lakhs, builders can collect from Rs. 50,000 to Rs. 1,00,000.
POWER BACK-UP –
The power backup charge is provided on an kWh-basis for each flat in the complex. Backup is available from 3KVA to 5KVA, ranging from 1 lakh to 1.5 lakhs.
AMENITIES AND CLUB CHARGE –
These charges apply to luxury flats with a clubhouse, swimming pool, and gym. The developer will charge you for these amenities at a lump sum of Rs. 50,000 to Rs. 1.5 lakhs.
STAMP DUTY AND REGISTRATION CHARGES –
In this case, stamp duty varies from state to state. So you must pay the stamp duty according to the state. Therefore, stamp duty and registration charges are 5-10% of the property value.
GST –
In an under-constructed property, both stamp duty and GST are levied where GST is 18% on ⅔ of the property cost. Therefore, the effective GST rate is 12%. It is the payable tax and added as a extra other charges before buying a house.
BROKERAGE –
Most resale property or ready-to-move-in property transactions are closed through a real estate agent or broker, who typically charges 1% to 2% of the property’s final value as a fee.
Essential Documents
The sale/purchase deed and the housing society share certificate are the major documents required while selling a property. Sale deed serve as confirmation for the land belonging to the seller only and he has full rights to sell the land. Some more documents such as NOC from the housing society, registered house documents and original copies of stamp duty are necessary. Also, the owner/owners have to submit documented consent if it is a joint ownership land.
Necessary clearances
The NOC from the society and title clearance are necessary, but they are not sufficient. The exact details of how old the building is, the carpet and built-up area, car parking status, the floor plan, land title (free hold/lease hold/collectors land), the conveyance of the society and transfer charges of the building and the apartment also have importance.
