• Input Tax Credit on flat purchased on dated 01 March 2018

Sir,

I booked a flat in the month of March 2018 and that time the GST was 12% and total cost of the flat was fixed Rs. 1.19 CR and as we know the GST rate has come down to 5% during the month of February 2019 but the builder has not given any benefit of reduction in GST and he demand the same amount which was fixed at the time of booking of the flat.

Further I want to know whether I am eligible for the input tax credit or not, because the sales manager assured me that I will get the benefit of input tax credit at the final payment but the builder didn't extend the benefit of Input tax credit.

Please suggest whether I am eligible for Input Tax Credit or not and how the calculation is done if I am eligible to get the benefits and what I should do as the GST has come down and around 26 lakh of payment is yet to be paid, Please suggest.
Asked 4 years ago in GST

Hello,

 

The reduced rate of GST is applicable at the option of the builder. If the builder has opted for the new reduced rates for ongoing projects, then he would be liable to collect GST only at reduced rates for any amount pending thereon. You need to check with your builder if he has opted for the new rates.

You won't be eligible to claim the input tax credit directly on your own. What the sales manager might have meant was that the ITC benefits available to the builder, because of change of tax from various taxes to GST, would be transferred through reduced prices to the buyers. 

 

I hope that this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2608 Answers
16 Consultations

5.0 on 5.0

Dear Sir,

-The reduced rates become effective from 01.04.2019. For the ongoing projects, promoters were having the option to continue with the old rates or opt for new reduced rates. In your case, promoter did not opt for the reduced rate therefore he is charging GST@12%

- As you are an end consumer of the goods and not registered under the GST Act, GST paid by you becomes your cost. Every registered person under GST is expected to pass the benefit of ITC to the person whom he is supplying goods. The purpose of GST is to remove the cascading effect of taxes. It is upto the promoter to pass the benefits of ITC availed by him on the raw material purchased by him. On your end, you have to do a calculation of cost of the flat before GST regime and post GST regime which is difficult.

 

- For detailed discussion, please call.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1031 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC or opt for 5 per cent GST rate without ITC.

 

“Ongoing projects” means projects where construction and actual booking started before April 1, 2019, but which was not completed by March 31, 2019.

 

In your case, the new rate is apply only if builder had opted the option of new rates.

 

Otherwise, you will be liable to pay GST as per old rates.

 

-No, you won't be eligible to claim the ITC as you are an end user of goods.

GST will be part of your cost.

 

 

 

 

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

For ongoing projects, if the builder has opted for 12%, then you need to pay 12% only. New rate of 5%  is applicable for new projects starting after Feb 2019. 

No, you wont be able to take input credit since this is not used for your business. If the sales manager has assured you, kindly ask him the reference of the law as per which section. 

You need to continue at the same rate 

 

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hi

The reduction in rate w.e.f. 1.4.19 was optional for the builders. The builders could either continue with 12% with ITC benefit or start with 5% without ITC benefit.

You need to confirm this from your builder only as to what rate he has opted for.

 

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

1. The reduction in rate was an option and not a compulsion on the builder whose project were on going. Even if they accept the 5% rate it wont give any benefit as it would increase their cost and in the end you will have to pay more or less the same amount.

 

2. As this is a B2C transaction you won't get any credit of such house.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

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