Home shoppers to pay higher GST on balance price
If a home purchaser has booked a flat and the occupancy certificates for it’s been issued before April 1, but he still has a few payments due towards the acquisition, then he’ll no longer get the advantage of decrease Goods & Services Tax (GST).
The Finance Ministry has made this clear within the second set of Frequently Asked Questions (FAQs) for GST on actual property.
Based on the GST Council’s choice, all of the new and ongoing real estate projects (for affordable and non-low-priced residential houses) will attract GST at the price of 1 in keeping with cent and five in line with cent. There is also a one-time option for the developers, which may be exercised till May 20, to choose an antique rate (effective fee of eight according to cent for inexpensive and 12 in line with cent for non-affordable beneath production residences). However, if a promoter or builder does now not work out the option inside the prescribed form, it will be deemed that he has opted for new rates.
Also read: Home customers have no say in the desire of GST price: FinMin.
To a query on GST rate applicable on projects regarding which occupancy certificate has been issued previous to April 1, 2019. Still, the balance payments are pending, and it said: “Time of delivery of the provider with the aid of way of construction of residences in such projects falls previous to April 1, 2019, and therefore the fees as existed previous to April 1 might practice to such stability needs.”
It means the effective charge would be eight according to cent for low priced housing and 12 in line with cent for the alternative.
Reverse charge mechanism
The FAQ also clarifies that GST is payable on Reverse Charge Mechanism (RCM) even for TDR (Transfer of Development Rights) from unregistered landowners, and the responsibility can be at the promoters. In this manner, the promoters may also deduct tax elements from the fee made to the landowners.
On the applicability of GST in case of redevelopment or slum rehabilitation project, (new or an existing challenge) wherein the constructed devices provided to existing occupiers by the developer free of financial consideration, it stated: “units provided freed from price also attract GST as their consideration is not cash however TDR/ FSI (Floor Space Index) or rights related to land on which production takes region.”
A circumstance below the brand new regime for availing decrease tax — 80 in step with cent of inputs and input services must be procured from a registered person. The difficulty was whether expenditure, which includes salaries, wages, etc., could be blanketed below input offerings for considering eighty in step with cent standards. The FAQ stated that offerings using an employee to the agency inside the course of or in terms of his employment are neither goods nor a service. Therefore, salaries and wages paid using a promoter to his personnel will not be relevant for the minimum buy requirement of eighty in step with cent.
The FAQ also clarified the valuation issue of TDR. “Value of TDR will be equal to the amount charged by the promoter for comparable flats from the unbiased customers booked at the date this is nearest to the date on which such improvement rights or FSI is transferred via the land proprietor to the promoter,” it said.
Abhishek Jain, Tax Partner at EY, applauded this Government’s pro-activeness in issuing complete clarifications for the actual property zone. “Clarifications on a few technical ambiguities like non-applicability of new prices for projects finished earlier than April 2019, valuation of TDR, and many others should help solve a few concerning issues for this zone,” he said.
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