Contemplating to buy a home? Know your rights well.
There have been talks of the overall cost of construction seems to have gone down under the Goods and Services Tax, GST in real estate. But how much benefit is actually reaching to the home buyers? Let us have a reality check.
Homebuyers of real estate properties are not supposed to pay GST if they purchase a fully constructed property after the issue of completion certificate. In fact, the builders are supposed to pass on the benefit of ITC and lower GST to buyers in the form of low costs.
However, tax experts reportedly believe that some builders/ contractors are not passing on the benefit of a lower tax burden to the home buyers.
The government has again clarified on Dec. 8 on GST in real estate will not be applicable on ready-to-move-in properties with a completion certificate, Money Control reported. The government also asked the builders to reduce the prices of properties by passing on the benefit of lower GST rate.
In fact, the government has now started questioning developers/builders who are not passing on the reduced rates and additional input tax credit (ITC) in order to ensure that homebuyers get this benefit. Like in the recent case of M/s Pyramid Infratech Pvt Ltd, Haryana, the builder allegedly failed to share the benefit of the input tax credit with buyers and forced them to pay more Goods and Services Tax.
On hearing pleas of the buyers, the National Anti-Profiteering Authority directed the builder to refund any amount collected in excess along with interest at 18 percent and show cause as to why the penalty in relation to anti-profiteering (higher of Rs 10,000 or tax evaded) should not be levied. When the builder responded that there had been an increase in the rate of tax and no benefit could be passed on by him to the buyers, the court stated that the builder has now become eligible to claim ITC after coming into force of the GST and hence he was liable to pass on the benefit to the buyers.
So, the keyword for every buyer while looking for a property is completion certificate. The absence of completion certificate will attract GST on sale- be it under construction property or ready-to-move-in flats. Completion certificate equates to zero GST in real estate.