Homebuyers will pay 12% GST on the balance owed if the certificate of completion was issued before March 31

NEW DELHI: Home Buyers You Will Have To Pay 12 Percent GST In The Amount Of Balance Due To The Builder If The Housing Project It Has Been Granted Certificate Of Completion For March 31, 2019, El CBIC Has Said.

Builders who have received Certificate Of Completion for an ongoing project before April 1, 2019, will have to charge 12 per cent GST from buyers on the balance amount due towards purchase of the flat.

Issuing The Second Set Of FAQs For Real Estate Sector, The Central Board Of Indirect Taxes And Customs (CBIC) Said That Builders Will Not Be Able To Adjust The Accumulated Credits In Ongoing Projects In Case They Opt For Lower New GST Rate Of 5 Per Cent For Normal And 1 Per Cent For Affordable Accommodation.

The First Set Of FAQs For Real Estate Sector Was Issued Last Week To Clarify Doubts With Regard To Migration Of Real Estate Developers To GST Rates For The Sector Which Has Come Into Force From April 1, 2019.

The GST Council, Headed By To Finance Minister Arun Jaitley And Comprising State Counterparts, Had In March Allowed Real Estate Players To Shift To 5 Per Cent GST Rate For Residential Units And 1 Per Cent For Affordable Accommodation Without The Benefit Of Input Tax Credit (ITC) From April 1, 2019.

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 (8 per cent for affordable Accommodation ), or opt for 5 per cent GST rate (1 per cent for affordable Accommodation ) without ITC and communicate to their respective jurisdictional officers the same by May 20.

To Be Consulted On What Will Be The Rate Of GST Applicable On Projects In Respect Of Which Occupation Certificate Has Been Issued Prior To April 1, 2019, But The Balance Demands Are Pending, The FAQ Said:" Time Of Supply Of The Service By Way Of Construction Of Apartments In Such Projects Falls Prior To April 1, 2019, And Then The Rates As Existed Prior To April 1, 2019, Would Apply To Such Balance Demands."

AMRG & Associates Partner Rajat Mohan Said," This Clarification Has Tightened The Grip On Taxpayers Who Intended To Take Benefit Of Lower Taxes Rates With The Aid Of Deferred Invoicing."

On Whether Or Not Accumulated ITC Can Be Adjusted Against New Tax Liability Of 5 Per Cent And 1 Per Cent, The FAQ Said:" No. GST On Services Of Construction Of An Apartment By A Promoter At The Rate Of 1 Per Cent/5 Per Cent Is To Be Discharged In Cash Only ITC, If Any, May Be Used For Discharging Any Other Supply Of Service."

" Developers Opting For New Tax Regime For Ongoing Projects Now Has Another Reason To Refrain From New Scheme," Mohan Said.

The CBIC Further Clarified That Exempted Goods Procured By A Builder Under The New Tax Regime Would Not Be Counted Within The 80 Per Cent Limit Set For Procurement From Registered Dealers.

" This Could Entail An Additional Tax Of 18 Per Cent On Value Of Exempt Supplies, Credit Of Which Would Be Available To Developers," Mohan Added.

While Deciding On Lower GST Rates For Real Estate Sector, The Council Had Said That At Least 80 Per Cent Of The Inputs Should Be Procured From Registered Dealer.

The CBIC Has Also Clarified That Developer And Not The Land Owner Will Have The Right To Decide Whether To Opt For New GST Rates Or Stick To Old Rates For Ongoing Projects.

EY Tax Partner Abhishek Jain Said:" Clarifications On Some Technical Ambiguities Like Non-applicability Of New Rates For Projects Completed Before April, 2019, Valuation Of TDR, Etc. Should Help Resolve Some Involved Issues For This Sector."