Real estate firms have time until May 10 to communicate to their respective jurisdictional officers whether they want to continue with the old GST rates with input tax credit.
With the new fiscal year kicking off, home buyers are a confused lot, with many having a tough time with recently revised Goods and Services Tax (GST) calculations.
The GST Council, in its 34th meeting, had finalised the modalities for the transition to new tax rates on residential flats, providing a flexible option for builders to choose from. According to the new scheme, developers have the option to apply for either the new GST rates — 1 per cent for affordable under-construction houses and 5 per cent on other houses — or old rates on ongoing projects where construction and actual bookings both began before April 1, 2019.
Real estate firms have time until May 10 to communicate to their respective jurisdictional officers whether they want to continue with the old GST rates with an input tax credit, failing which they will be deemed to have migrated to new tax slabs. Most developers have already expressed their intent to go with the old rates.
“For projects which were launched before April 2019, developers would prefer to stick to the old GST rates. It may not be possible to work on financial matters if the new GST rate is applied on older projects,” Harvinder Sikka, MD, Sikka Group pointed out.
Meanwhile, homebuyers are finding the flexibility offered more in the developers’ interest than theirs.
“It is not clear how much it is going to affect us. The new rates seem lucrative, but we are in the dark as to how much it is going to benefit us if we stick to the new GST rates. I believe that the GST Council should have left the platform open for the buyer to decide which GST rates they want even in the projects launched before April 1, 2019. Right now, the buyer has no choice but to go with whatever the developer decides,” Piyush Ranjan, a homebuyer from Noida said.
Experts had already warned of the potential for confusion.“Customers prefer reduced rates whereas developers might prefer higher rates with input tax credit. We can expect many more disputes and cases in the anti-profiteering authority in the coming days,” Ankur Dhawan, Chief Investment Officer, PropTiger had predicted post GST ruling.
Source- New Indian Express.