See government has given option to builders to keep the older gst rat with ITC for that builder with older rates has to pass on benefits of input tax credit to the customers.
GST rate of property launched before 1st April 19
Hi We have book a property in Godrej Aqua (Bangalore) in Feb2019. Our cost sheet given for different installments were with older GST rate12/18%). After 1st April with new GST(5%) implementation, builder has communicated us that they will continue to charge us with older GST rate for all next installments because the project was launched before April and GST counsel has give them option to continue with older GST rate with ITC. As per builder since the input to Credit(ITC) was considered in the calculation of base price and hence with older GST charge our installation amount will remain same. As per them, any change in GST will result in higher cost/project delay and rearrangement of agreement. My query is that do I have a legal option to ask builder to charge with new GST rate(5%) instead of older rate. My Agreement of Sale has no where mention about calculation of Base Price after adjustment of ITC and hence I am not sure on how builder is keeping older Base price with older GST rate. And Ideally nothing is changing for us despite lower GST rate reduction by goverment for project launched before April19. Kindly auggest
Asked 6 years ago in Property Law
Religion: Hindu
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Hi The GST communication from the builder is as follows. However our Agreement of Sale hasn't mentioned that the fixation of base price was after consideration of ITC benefit. Do I have any options to get ITC benefit pass to us? (OR force them to go with new GST of 5%) ``````````````````````````` "For projects where both construction and bookings have started before 1 April 2019, the council has provided all the real estate developers, a one-time option between : · Continuing with old GST rates (8% for affordable housing units and 12% for other units) with input tax credit · Switching to new GST rates (1% for affordable housing units and 5% for other units) without input tax credit · Other/miscellaneous charges will continue to attract GST of 18%. We have attached the notification circular by the GST council. Any attempt to change the GST rates to the new ones without ITC benefits might necessitate re-arrangement of our existing contracts for supply and construction which might lead to significant cost escalation and/ or project delays, Hence, Godrej Properties after due consideration has decided to continue with the previous GST regime of 12% GST with Input Tax Credit (8% for affordable housing projects). This decision is taken with an objective of delivering your home on time while honouring our existing agreements with our customers. Therefore, GST rate for your existing residential projects is as follows: • GST @ 12% for Existing Residential Projects which are other than Affordable Housing. • GST @ 8% for Existing Residential Projects under Affordable Housing. • Other/misc charges will continue to attract 18 % GST. Godrej AQUA was launched in February 2019 post GST implementation ( July 2017). Thus ITC benefit has already been considered during calculation of cost of the project and fixation of base price." ``````````````````````````````
Asked 6 years ago
See if the builder claims to give you ITC benefits in the base calculation you can ask sheet of calculation of same , you cannot force builder to change to new 5 percent it's there discretion.
Check the calculation if the due ITC is not passed on you can take steps.
GST council has given builders option to continue with old GST rates with ITC or new GST rates
2) you cannot force builder to switch to new GST rates
You cannot force builder to opt for new GST rates of 5 per cent
You need to pay the applicable gst at the time of payment
Builder can opt to continue the existing rate of 8% GST for affordable housing and 12% GST for other residential project, with ITC
The GST on under-construction flats, which are not in the affordable housing segment, has been reduced to 5% without input tax credit (ITC) from 12% earlier with the ITC. The GST rate on affordable homes has been reduced to 1% without the ITC from earlier 8% with the ITC.
The rate cut is for under-construction property or ready-to-move-in flats where the completion certificate is not issued at the time of sale. Properties, for which construction has been completed, attract stamp duty, not the GST.
Going by the new GST rates, builders will not be able to claim the ITC.
The builder has no choice on this, he can't say that he will charge GST at old rate only with ITC, you can issue a legal notice to him and drag him to consumer forum for relief.
The builder is misguiding the buyers with some wrong inputs about it.
He cannot decide about the GST when the government itself has slashed the rates as mentioned above in the previous post.
You can drag him to consumer forum for deficiency in service and also for unfair trade practice quoting the government decision on this.
Dear Client
The builder is right in this case as GST Council has given the option to Developers who have started the project before 1st April 2019. As Developers can choose between the old and new GST rates for existing under-construction projects.
Whereas Any new under-construction project that is launched after 1 April will have to adhere to new GST rates
the GST Council, which met on 19 March, decided to give developers a choice in how to levy GST on properties already under construction.
In the case of regular housing, the developers can either opt for the existing GST rate of 12% with input tax credit (ITC) or the new rate of 5% without ITC that was announced on 24 February. For affordable housing projects, developers can either go for the existing GST rate of 8% with ITC or the new rate of 1% without ITC. The new lower GST rates and the choice for the developers come into effect from 1 April 2019.
- As per the information mentioned in the present query, makes it clear that the builder is not justifying in giving you the exact position of law with respect to the GST amendments.
- It is true that the contract cost may get increase, but definitely, would be much lesser than the old rates of GST.
- If a person has paid the instalments in accordance with old rates then he might not be in a position to ask for new rates applicability as per law.
- But, here, instalments are still pending, builder cannot give excuse to continue with old rates.
- If you wish then you can challenge it before the court of law.
