Pass on benefits of lower tax under GST regime to property buyers’
New Delhi, June 15:
The Finance Ministry on Thursday asserted that the construction of flats, complex, buildings will attract lower tax incidence under the proposed Goods and Services Tax (GST) regime as compared to a plethora of Central and State indirect taxes suffered under the existing regime.
The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/instalments, an official release said.
The Finance Ministry has now advised all builders/construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on instalments to be received after imposition of GST.
“Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under Section 171 of GST law,” the release added.
The statement came in the wake of complaints received by CBEC and States that in view of the works contract service tax rate under GST at 12 per cent in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before July 1, 2017 or to face higher tax incidence for payment made after July 1. This is against the GST law, the release added.
(This article was published in the Business Line print edition dated June 16, 2017)