• Regarding passing ITC benefit to home buyer

I booked under construction property in July 2017 after imposition GST (1st July 2017), Only 1st slab(20%) of building is completed at that time, Building construction start prior July 2017, I did agreement to sale in Dec 2017 and I had paid 12%(3,00,060/-)GST on total cost of flat(25,00,500/-)at that time. Builder gets Completion certificate in Feb-2019, Sale Deed agreement made on 12/04/2019. Builder does not passed ITC Till date ,can I eligible to get ITC benefit as per GST law.?

No Flat Sell by Builder prior July 2017.
Asked 4 years ago in Taxation

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16 Answers

Yes you will get the same

Prashant Nayak
Advocate, Mumbai
32061 Answers
183 Consultations

4.1 on 5.0

Dear Sir,

Builders must pass on the GST benefit to homebuyers: Experts


Recent rulings by National Anti-Profiteering Agency have made it clear that citing practical difficulties for inability in passing on the profits is not acceptable to authorities. Profit, if accrued, needs to be passed on.


The last couple of months have seen a lot of action on the Goods & Services Tax (GST) front. Apart from rulings pronounced by the National Anti-Profiteering Authority, there have also been notifications, circulars and FAQs released by the government to clear any ambiguity on the issue.

In its recent ruling, the National Anti-Profiteering Agency (NAA) had held that excuses such as uncertainties associated with the GST regime cannot be used to deny homebuyers benefits of a lower tax rate. What this means is that if a real estate developer has benefited from the introduction of GST in terms of lower rate of tax, or additional input tax credits (ITC), the benefits should be passed on to  homebuyers.

In the second week of May, the Central Board of Indirect Taxes and Customs (CBIC) had issued the second set of FAQs for real estate sector, wherein it said that builders will not be able to adjust the accumulated credits in ongoing projects in case they opt for lower new GST rate of five percent for normal and a percent for affordable housing.

 

Homebuyers too will have to pay 12 percent GST on the balance amount due to the builder if the housing project has been granted completion certificate by March 31, CBIC said.

 

Builders who have received completion certificate for an ongoing project before April 1 will have to charge 12 percent GST from buyers on the balance amount due towards purchase of the flat.

The GST Council had in March permitted real estate developers to shift to the five percent GST rate for residential units and a percent for affordable housing without the benefit of input tax credit from April 1.

 

For the ongoing projects, builders have been given the option to either continue in 12 percent GST slab with ITC (eight percent for affordable housing), or opt for 5 percent GST rate (one percent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 20.

Here are some recent rulings pronounced by the NAA, which have held that the developer must pass on the benefit on account of GST to homebuyers.

 

Netravathi Kalaskar
Advocate, Bengaluru
4952 Answers
27 Consultations

4.8 on 5.0

Yes you are eligible for ITc benifit if builder didn't passed on same you can complaint before GST commissioner and before national anti profiteering tribunal against the builder.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Complain against builder before National Anti-Profiteering Authority If he has failed to pass on benefits to you 

 

2) 

liable for imposition of penalty under Section 171 of CGST act read with Rule 133 (3) (d) of the CGST Rules, 2017.

 

Ajay Sethi
Advocate, Mumbai
94912 Answers
7570 Consultations

5.0 on 5.0

Do you not want to pay tax to the govt?

You paid GST @ 12 % . This will go to the govt. Builder collected this from you on behalf of govt.

Now how you can claim  refund of the tax which you have paid as per the applicable rate of GST.

ITC is not applicable to home buyer unless builder gains any benefit arising from reduction in tax on material and services used for building construction.

So there must be an element of benefit/profit by your builder during the entire process of transaction, that should be passed on to the home buyer.

In the given case, there is no such gain by builder hence question of any ITC pass on to you does not arise at all.

It's effects are evident in  all MRP priced products and in contracts where prices are inclusive of taxes.

Further to note that entire concept of anti profiteering and passing on ITC to end user under GST stands against bunisess principles of price fixing in  unregulated industries. 

 

 

 

 

Kallol Majumdar
Advocate, Kolkata
2837 Answers
14 Consultations

5.0 on 5.0

Complain to National Anti-Profiteering Agency. Builder must have avail ITC which should be pass to home buyer.

Yogendra Singh Rajawat
Advocate, Jaipur
22669 Answers
31 Consultations

4.4 on 5.0

- Yes, the builder should pass the benefit of Input Tax Credit to the Home Buyer.

- Clause 171 of the GST Act provides that it is mandatory to pass on the benefit due to reduction in the rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices. 

- Since, the builder not passes ITC , then you should lodge your complaint with the National Anti-Profiteering Authority against the said builder for the same. 

Mohammed Shahzad
Advocate, Delhi
13344 Answers
199 Consultations

5.0 on 5.0

you can file complaint against builder before National anti profiteering authority. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

In its recent ruling, the National Anti-Profiteering Agency (NAA) had held that excuses such as uncertainties associated with the GST regime cannot be used to deny home buyers benefits of a lower tax rate.

Builders who have received completion certificate for an ongoing project before April 1 will have to charge 12 percent GST from buyers on the balance amount due towards purchase of the flat.

“There are enough rulings now, to make the home buyers aware that, builders who have gained on account of additional input tax credits, need to pass on the same to them.

In a setback for real estate developers, the National Anti- profiteering authority has held that the home buyers cannot endlessly wait to get the benefit of input tax credit  (ITC) for GST payments as the law does not provide that the gain should only accrue only on completion of projects.

You may issue a notice to the builder demanding the ITC, after which let him give a reply denying the payment, you may drag him to the consumer forum seeking compensation for deficiency in service.

 

 

T Kalaiselvan
Advocate, Vellore
85112 Answers
2215 Consultations

5.0 on 5.0

Yes you are eligible to get ITC benefit as per GST laws. 

If builder have not passed ITC till date then you should complaint against builder in National Anti-Profiteering Authority for not passing the benefits to you. 

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

5.0 on 5.0

See you have to wait your complaint is already forwarded to concerned office.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Wait fore screening committee report 

Ajay Sethi
Advocate, Mumbai
94912 Answers
7570 Consultations

5.0 on 5.0

Since you have been intimated that your complaint has been already forwarded you may wait for the reply from the concerned authorities. 

T Kalaiselvan
Advocate, Vellore
85112 Answers
2215 Consultations

5.0 on 5.0

you have to wait. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

At least communicate him and ask what other detail, he/she may require.

Yogendra Singh Rajawat
Advocate, Jaipur
22669 Answers
31 Consultations

4.4 on 5.0

Yes you can send the said complaint and do follow up

Prashant Nayak
Advocate, Mumbai
32061 Answers
183 Consultations

4.1 on 5.0

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