GST Ruled Out For These Flats And Apartments
The goods and services tax (GST) on real estate projects under construction is squeezing the cash flow of realtors as many buyers are waiting for finished homes or opting for old ones to escape the tax, multiple stakeholders have told The Telegraph.
The GST is actually paid to the government by the builder who gets a refund on his inputs. Under normal circumstances, the builder need not have passed on the entire GST to the buyer because of the refunds.
Last month, Buyers of under-construction properties, including flats, across the country were being asked to pay as GST 12* of the agreement value. In the latest turn of events, it has come to everyone’s attention as the Finance Ministry released a statement announcing that now no extra GST charges will be applicable to flats as well as to real estate after the certificate of completion has been issued.
However, GST is still applicable to the sale of under construction property or ready for possession flats where completion certificate is not issued at the time of sale.
According to the finance ministry in case of housing projects under affordable housing schemes like Pradhan Mantri Awas Yojana, Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana or any other housing scheme of state governments, will have to pay GST of 8 % only will be applicable.
Reports say, ‘For such projects, after offsetting input tax credit, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.’
Overcharging Put To a Stop
This step has been taken for the purpose of protecting the prospective buyers from the various different schemes of builders who are in the business to earn their profit, with disregard to the medium they want to earn with.
Since the beginning, GST has been waived off totally for some products, reduced for some and increased as well. Time and again, the ministry has reached out to the public of India with their protection in mind.
However, there are still some people in the country who still do not have an idea about how the GST works and pay GST after paying the MRP as well and get manipulated by shrewd sellers. To keep this in check, the Finance Ministry has brought this amendment to the attention of potential buyers.
GST Benefits Should Be Passed On To The Customers
Clause 171 has been inserted in the GST Act which provides that it is mandatory to pass on the benefit due to a reduction in the rate of tax to the consumer.