• GST charge by builder on other charges

I have purchased flat in pune before GST implemented. I have paid service tax and VAT (4.5% + 1%) demand on before 1st July.
After 1st July 2017 Till 31 Dec 2017 builder asking 12 % GST 
and now in Final demand he is asking GST @ 8 % (As per new circular I guess)
However is also asking 18 % GST on Infra Charges, Society formation & Membership ,Legal chrgs and Advance Maintaince Charges for 12 month.
Now my question is 18 % is correct ? Because Infra and other charges are not part of aggrement value. These are seperate charges. I am confused here.
Asked 4 months ago in Property Law from Pune, Maharashtra
Religion: Hindu
the builder or any company appointed by the builder is taking care of the facilities and maintenance, all residents have to pay GST 

2) all payments made to builder for society formation ,infra cgharges , legal charges , maintenance would at tract GST
Ajay Sethi
Advocate, Mumbai
53250 Answers
3188 Consultations

5.0 on 5.0

the GST Council had extended the concessional rate of 12 per cent GST for construction of houses under the Credit Linked Subsidy Scheme (CLSS) to promote affordable housing, which has been given infrastructure status in 2017-18 Budget.


2) The effective GST rate, however, comes down to 8 per cent after deducting one third of the amount charged for the house, flat, towards land cost. This provision has effective from January 25.


3) you can seek clarification from builder as to why 18 per ce t is being charged
Ajay Sethi
Advocate, Mumbai
53250 Answers
3188 Consultations

5.0 on 5.0

If the flat are under CLSS scheme/ PMAY then only you have the benifit of 8 percent gst otherwise has to pay 12 percent on the remaining amount .

Further yes on maintenance charges as it constitute separate service builder can charge 18 percent GST.
Shubham Jhajharia
Advocate, Ahmedabad
8531 Answers
26 Consultations

5.0 on 5.0

Sir maintenance and infrastructure up keeping is service as defined under the Act and is separate service it does not form part of.the building construction service by builder for the vary reason he can charge 18 percent gst on same.
Shubham Jhajharia
Advocate, Ahmedabad
8531 Answers
26 Consultations

5.0 on 5.0

You can send him a legal notice and demand explanation under which Provision he is charging the get on other charges. If he doesn't reply you can file a Complaint to the authorities in central govt or also can claim refund in Consumer court for defiency of service.
Prashant Nayak
Advocate, Mumbai
3133 Answers
2 Consultations

4.8 on 5.0

Dont worry about it.
It is clear that the builder is taking everyone for a good ride.
T he builders should not recover any GST from home buyers since the effective GST rate on “almost all” affordable housing projects is eight per cent which could be adjusted against the input credit.
So far, the option of getting full input set-off credit that developers enjoy on under-construction projects is not be applicable on ready-to-move-in flats. This could effectively mean higher costs for homebuyers of ready-to-move-in flats, say developers.

"In the current arrangement, while developers might still get some benefits for projects that are in nascent stages, they will have to bear the tax burden for the ready-to-move-in projects since they are kept out of the GST ambit," 
There are many taxes and duties that a developer pays on the procurement side, such as Customs duty, Central Sales Tax, excise duty, entry tax, etc. These are subsequently passed on to the final pricing of the units and, thereby, to the buyer. As GST proposes to roll multiple taxes into one, the cost of construction will come down. 

You may ask the details or specific law for the demands made by the builder in this regard after which you can take him into task or refuse to pay him any money and resort to legal steps in this regard.
T Kalaiselvan
Advocate, Vellore
43320 Answers
488 Consultations

5.0 on 5.0

What about 18% . Why he charged 18 % here and for rest all 8 %. I mean on what basic 18%?


the increase in tax is very less for major inputs. The indirect taxes on steel were around 17 per cent and that has now come to 18 per cent under GST, similarly, for cement the taxes totalled to nearly 24 per cent which now has been standardised at 28 per cent. The GST rate for work contracts has also been fixed at 12 per cent.
 while the higher rate for services under the indirect tax regime is proposed to be 18 per cent, essential services could be taxed at six 
per cent or 12 per cent. Around 70 per cent of the taxable base is proposed to be taxed at either 18 per cent, 12 per cent or six per cent, with more than 50 per cent 
of the items to be taxed at 12 per cent or 18 per cent.
T Kalaiselvan
Advocate, Vellore
43320 Answers
488 Consultations

5.0 on 5.0

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