GST on underconstruction properties
10 months ago
Why GST is being charged at 18% on Price of an underconstruction property and not on cost? I had booked an underconstruction villa at 5Cr in 2019 plus 12% GST. The villa is still under construction and the new slab payments are being charged at 18%. The quoted price includes hefty profit by the builder and I end up paying 18% on the profit builders makes on me. How unfair is this, and isn't there any public litigation to confront this sheer exploitation?
A.Dear Client,
In March 2019, the GST Council cut the tax rates to 5% from 12% on residential properties and 1% from 8% for the affordable housing segment. However, Input Tax Credit (ITC) benefits will not be available under the new tax rate policy. The builders/developers shall now have an option for all the ongoing residential projects to either opt to pay tax at new rates (i.e. concessional rate of GST, with a condition that tax credit shall not be available) or continue with the earlier rate of GST, along with input tax credit. You may accordingly approach the concerned builder or the GST authority if the matter appears to you unfair and having an adverse impact on home buyers.
In March 2019, the GST Council cut the tax rates to 5% from 12% on residential properties and 1% from 8% for the affordable housing segment. However, Input Tax Credit (ITC) benefits will not be available under the new tax rate policy. The builders/developers shall now have an option for all the ongoing residential projects to either opt to pay tax at new rates (i.e. concessional rate of GST, with a condition that tax credit shall not be available) or continue with the earlier rate of GST, along with input tax credit. You may accordingly approach the concerned builder or the GST authority if the matter appears to you unfair and having an adverse impact on home buyers.
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Kavindra Sharma
Replied 10 months ago
Instead of reducing from 12% to 5%, my builder (Lodha) has increased GST to be collected from 12% to now 18% for last one year. There was some govt notification in 2022 to this effect that he shared.
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