GST under construction booked flat

GST under construction booked flat

I have booked a flat on Nov 2018 for a under construction project which has a completion on 31st July 19, the flat was booked with an advanced payment through bank transfer for the amount of 1lakh . I am being charged 12% GST where I am being provided 3% of ITC. Post deduction of ITC I am being charged GST at 9% on the total flat price including amanities charges.

I was about to do the registration for the flat and the news for GST change had come out. I asked the builder to wait till 1st April 2019 so that instead of he charging me 9% of GST after deducting ITC, I will have to pay 5% GST. However the builder says that in that case he will increase the flats rate. As per the builder even if I have a already booked flat the flat rate increaseas they have to cover the difference or deduction in the package. What I cannot understand is that the GST is going to the government and the government has bought a change in the GST concept to provide consumers their benefits of the reduction in GST. However I am unsure why builder is trying to change the flat per square feet rate of a already booked flat even after the change of GST rule is applicable. Please let me know if this falls under anti profiteering

Asked 5 years ago in GST

Need answers for below questions looking at the above mentioned situation.

1. Flat Booked before in November 18 no invoice raised yet means no registration is done for the flat yet as it's only booked, If I do a registration of the flat after 1st April 19 will I be charged 5% GST ? (Completion of this non affordable project is 31st July 19)

2. In case as the builder said to cover up and eat up the GST benefits for me which will be applied after 1st April 19 he will be increasing the flat rate no matter the flat is already booked for a certain amount of package, Is the builder doing this correct and does this falls under anti profiteering ?

3. As I have paid a booking amount to the builder to lock the flat rate, does the builder has a power to increase the rate of the flat just to cover up the GST benefits for a consumer ?

4. I had paid 1lakh for booking and as registration is not done yet, Will I be charged 9 percent GST after the ITC of 3 percent on the booking amount ? Also in case I complete the registration post 1st April will I be charged 5 Percent GST on the rest of the payment consideration this is a non affordable project ?

Asked 5 years ago

1) In case of on-going projects where construction has been started and booking is done before 31.03.2019, there is an one time option available to the developer and builders to charge GST @ 12% with ITC i.e. you will be charged GST @9% which is current rate. Second option is charging GST @5% without ITC on all payments on or after 01.04.2019. Builder has to follow one option uniformly. he can not adopt different options with his customers. In case of GST@5% without ITC, cost will be increased. In agreement there might be a clause of escalation in prices.

2) The new rates are proposed keeping in view the complaints received by the anti-profiteering authority and various other reasons, one if which is to provide benefit to consumers by reducing the rate. In scenario, cost of the builder is bound to increase.

3) Same as above.

4) You have to check with the builder what option he is exercising. It is better if pool of consumers do the comparative calculations before and after introduction of new GST rates.

Thanks

Vivek Kumar Arora

CA, Delhi

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Increase the rate of the already booked flat, isn't that a breach of a contract signed by both the parties ?

GST meetings minutes also says these point too where in case the builder has purchased material from a registered source they can enjoy the benefits of the change too. It's the builders headache now as their side story is in conflict with the government law, do you agree ?

Asked 5 years ago

- As per GSTC meeting meeting, builder can reduce the rate to 1% or 5% without availing ITC if the material or services purchased is atleast from 80% from the registered dealers otherwise he needs to pay RCM.

- In respect to your first questions, please check the agreement clauses.

Vivek Kumar Arora

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Dear Sir,

Hope you are doing well !!

New rate of 5% without input tax credit shall be applicable on construction of all houses other than affordable houses in ongoing projects whether booked prior to or after 01.04.2019. In case of houses booked prior to 01.04.2019, new rate shall be available on instalments payable on or after 01.04.2019.

The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions,‑

a) Input tax credit shall not be available,

b) 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.

Payal Chhajed

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https://housing.com/news/gst-real-estate-will-impact-home-buyers-industry/

kindly go through this, it will be helpful.

Chirag Maru

CA, Raipur

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In case the builder has purchased material from a registered source they can enjoy the benefits of the change only if
80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons.

Payal Chhajed

CA, Mumbai

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