Even almost one-and-a-half year after the roll-out of GST (Goods and Services Tax) in July 2017, there is confusion among a majority of homebuyers about how much GST they are required to pay on the different types of homes that are available in the market. There is also confusion about the amount of rebate that a prospective homebuyer is entitled to on the back of the pass-over of ITC (Input Tax Credit).
Keeping this in view, the government on Saturday clarified that there is no GST on sale of complex/ building and ready-to-move-in flats where sale takes place after the issue of completion certificate by the competent authority. “GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale,” a statement issued by the Ministry of Finance said.
The effective rate of tax and credit available to the builders for payment of tax are summarized in the table for pre-GST and GST regime:
Housing projects in the affordable segment, such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Government etc., attract GST of 8%. 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.
“For projects other than those which fall under the affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to implementation of GST. Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down,” the government said.
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Source: Financial Express