• GST on under-construction property

My case of history
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28th May 2017 - I booked an under construction flat (under 60sq.mt. carpet area) with Rs.2 Lacks on 28th May 2017 and agreed on a sale agreement in a non-judicial stamp paper with the builder on that day. According to the agreement there was no clause about extra service tax on property price. I have been provided a money receipt invoice of token amount but there was no mention of service tax.

30th June 2017 - After get sanction letter of home lone I paid balance amount of my own contribution on 30th June 2017. Carpet area of my booked flat is somewhat under 60sq.mt. I belong to a lower income group (LIG). So I am eligible for ‘Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme ( CLSS) & I came to know from bank that register sales agreement is necessary for it & also I have to include my wife as a co-owner in sale agreement.

1st July 2017 - GST came into effect on 1st July 2017.

21th July 2017 - Sale agreement registration took place on 21th July 2017 at Kolkata West Bengal office & an extra clause has been added by the builder that GST will be applicable as per law on total property price.

30th January 2018 - I visited my flat on 30th January 2018, I came to know from builder that the flat is all most completed as per agreement & ready to be handed over within 3 months. Now he is claiming 12% GST on property price at the time of flat registration. 

5th February 2018 - I told him that as per new rules (effective from 18th January 2018 on 25th GST Council meeting) only 8% GST is applicable for 60 sqmt carpet area flat which is under the Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme ( CLSS), but he is still demanding 12% GST at the time of final registration.

My question is 
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1. Is GST applicable on this property as I booked it before 1st July 2017?
2. If GST is applicable, then will it be applicable on the amount which I have already paid to the Builder before 1st July?
3.  12% or 8%  GST will applicable for My Flat as because I belong to lower income group (LIG) and Carpet area of my booked flat is under 60sq.mt. So I am eligible for ‘Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme( CLSS).

4. At which time developer can claim Service tax as per GST Rules?
       i)    At the time of final registration of flat. or 
       ii)   When devloper is able to submit the Completion Certificate issused by the competent authority. or
       iii)  At the time of part payment.

5. If developer is charging extra amount as Service tax(GST) and not passing the tax input credit properly then where should I complain as per GST Act Rule?
Asked 6 months ago in Taxation from Kolkata Krishnapur, West Bengal
Instead of getting in any confusion please note that the GST is applicable on the under construction property and that is over and above the price negotiated if  applicable tax not included.
In case of any complaint you may approach GST commissioner
Vimlesh Prasad Mishra
Advocate, Lucknow
2668 Answers
5 Consultations

4.9 on 5.0

1) GST is applicable on payments made after 1st July 2017 

2) even if booking dine before 1st July 2017  GST is applicable on payments made after 1st July 

3) 12 per ce t is applicable on payments made between July 2017 till January 2018 

4)to  ensure that developers and service providers pass on the benefit to the final customer, the Government has included an anti-profiteering clause in the GST bill under section 171 of GST law. This clause clearly states that it is mandatory to pass on the benefit of tax reduction due to input tax credit to the final customer.
 
If any developer chooses not to do so, then there are penal consequences, to be decided by Anti-profiteering Authority.
Ajay Sethi
Advocate, Mumbai
49234 Answers
2936 Consultations

5.0 on 5.0

Hello sir , you can approach RERA forum or consumer court to file complaint against the builder , in case he is charging tax illegally ..
Hemant Chaudhary
Advocate, Gurgaon
3465 Answers
15 Consultations

4.9 on 5.0

1. yes GST is applicable on this property.
2. It will be applicable to the amount paid after 01.July.2017
3. 12% will be the rate of interest 
5. If the benefit of tax reduction is not being passed to you as per the GST Act then you may write to the anti profiteering authority constituted but the government u/s 171.

Regards 
Anilesh Tewari
Advocate, New Delhi
9955 Answers
133 Consultations

5.0 on 5.0

1.  GST is applicable for under construction property as on the effective date of the implementation of GST rules.

2.  GST may be applicable for prospective amount

3.  For tax purposes, the process of buying an under-construction property was seen as buying a service from a builder. Earlier, this attracted service tax. Now GST has replaced service tax in these transactions.
In its 25th GST council meeting, it has been decided to extend the benefits to houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Sections (EWS); lower-income group (LIG), middle income group-1 (MlG-1) and middle income group-2 (MlG-2) under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana (Urban) and low-cost houses up to a carpet area of 60 square metres per house in a housing project that has been given infrastructure status, as proposed by Ministry of Housing and Urban Affairs.
The new GST rate on these houses would be 12%, with one-third abutment for land cost; resulting in an effective rate of 8%.

4.  Now GST has replaced service tax in these transactions. However, there are other goods and services that continue to attract taxes in addition to the GST. 
After buying a property, the buyer has to register it by paying stamp duty and registration fee—which are in addition to the GST. Stamp duty is levied by respective state governments and usually varies between 5% and 8% across the country. This means that GST and these other fees constitute about 20% of a property’s value. 

5.  You can make a complaint with RERA or can drag him to consumer court also.
T Kalaiselvan
Advocate, Vellore
39440 Answers
422 Consultations

5.0 on 5.0

1) 8 per cent GST would be applicable 

2) the agreement should specify x amount is being paid towards GST 
Ajay Sethi
Advocate, Mumbai
49234 Answers
2936 Consultations

5.0 on 5.0

1.  The new GST rate on these houses would be 12%, with one-third abutment for land cost; resulting in an effective rate of 8%.

2.  You can demand the GST registration number and other relevant details.
T Kalaiselvan
Advocate, Vellore
39440 Answers
422 Consultations

5.0 on 5.0

Dear Sir,

Hope following information is sufficient.

GST applies to under-construction properties
If you are buying an under-construction property, it is considered as availing a service from the builder; hence, you are supposed to pay GST on it. According to the GST law, construction of a building, complex or a part of it, intended for sale to a buyer, attracts GST on the sale price. However, the tax should not be charged if the property is being bought after the issuance of completion certificate by a government authority or after the property has undergone occupation, which means it is a case of resale.
Kishan Dutt Kalaskar
Advocate, Bangalore
2672 Answers
43 Consultations

5.0 on 5.0

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