ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Railways
  • World
    • Economy
    • Politics
    • Markets
  • Survey
  • videos
  • photos
  • ZNAA'22
  • Trending News
    • Viral News
    • Travel
    • People
    • Entertainment
    • Sports
  • More ...
    • VIDEOS
    • PHOTOS
BREAKING NEWS
  • IPO: 11 public offers raise Rs 33,000 cr between April-June FY23; 17 more in pipeline
  • Rakesh Jhunjhunwala-backed Akasa Air first commercial flight flagged off by Civil Aviation Minister Jyotiraditya Scindia on this
  • IRDAI to rename grievance redressal mechanism; complaints can be filed in regional languages soon
  • Market next week: Global cues, macro numbers, last batch of earnings to dictate D-Street in holiday-truncated week: Experts
  • Eight of top-10 valued firms add Rs 98,235 cr in m-cap; Infosys, TCS lead gainers
Read in App
Business News » India News

New GST rate on under construction property: Here's what builders and buyers must know

Seeking to end the confusion about the new GST slabs for the real estate sector, the Finance Ministry has come out with answers to Frequently Asked Questions (FAQ), clarifying 41 issues.

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
New GST rate on under construction property: Here's what builders and buyers must know
For the under-construction projects, builders can either continue in 12 per cent GST slab with ITC (8 per cent for affordable housing) or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC. Image: Reuters

Seeking to end the confusion about the new GST slabs for the real estate sector, the Finance Ministry has come out with answers to Frequently Asked Questions (FAQ), clarifying 41 issues. As per the FAQs, a homebuyer cannot decide the GST rate which will be applicable on the amount remaining on an under-construction flat. Only the can exercise the option to pay tax on construction of apartments at the old rate of 12 per cent, by May 10 at the latest. "“If the builder does not exercises his option to continue to pay tax at the old rate...the effective GST rate applicable on all your (buyer) instalments payable to the builder on or after April 1, 2019, shall be either 1 per cent or 5 per cent, depending on whether the apartment is an affordable or other-than-affordable residential apartment,” says the new document. 

The lowered GST rate has become applicable since April 1. 

The tax department has also said that builders will now have to refund GST paid by home buyers in case s/he cancels the flat booked in the last fiscal and will be allowed to avail credit adjustment for such refund. 

The FAQ on the real estate sector has been released by the Central Board of Indirect Taxes and Customs (CBIC). 

The new migration provision, which came into effect from April 1, allows the real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC).

For the under-construction projects, builders can either continue in 12 per cent GST slab with ITC (8 per cent for affordable housing) or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC.

On a question, "Does a promoter or a builder has option to pay tax at old rates of 8% & 12% with ITC?", the new document says, "Yes, but such an option is available in the case of an ongoing project. In case of such a project, the promoter or builder has option to pay GST at old effective rate of 8% and 12% with ITC. To continue with the old rates, the promoter/ builder has to exercise one time option in the prescribed form and submit the same manually to the jurisdictional Commissioner by the 10th of May, 2019. 

"However, in case where a promoter or builder does not exercise option in the prescribed form, it shall  be deemed that he has opted for new rates in respect of ongoing projects and accordingly new rate of GST i.e. 5% / 1% shall be applicable and all the provisions of new scheme including transitional provisions shall be applied. There is no such option available in case of projects which commence on or after 01.04.2019. Construction of residential apartments in projects commencing on or after 01.04.2019 shall compulsorily attract new rate of GST @ 1% or 5% without ITC."
The developer can issue a 'Credit Note' to the buyer as per provisions of Section 34 in case of change in price or cancellation of booking. "Developer shall be able to take adjustment of tax paid in respect of the amount of such Credit Note," the FAQ said.

The FAQ says that in case a real estate developer has collected 12 per cent GST from home buyers beginning April 1, 2019, but later opted for 5 per cent rate, the builder will have to refund the extra tax (7 per cent) collected to the buyer. However, the FAQ don't clarify whether the 7 per cent tax refunded by the builder will be adjusted against his GST liability.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Goods and Services taxGST
Updated: Thu, May 09, 2019
11:22 am
New Delhi, ZeeBiz WebDesk
RELATED NEWS
Tax arrears recovery: Rs 21 lakh crore! Parliament panel asks revenue dept to formulate concrete action plan Tax arrears recovery: Rs 21 lakh crore! Parliament panel asks revenue dept to formulate concrete action plan
GST: E-invoicing now mandatory for businesses with annual turnover of Rs 10 crore from October GST: E-invoicing now mandatory for businesses with annual turnover of Rs 10 crore from October
GST Impact on Households: here is a list of 10 items that become dearer from today GST Impact on Households: here is a list of 10 items that become dearer from today
GST rate hike from today: What gets costlier - Full list GST rate hike from today: What gets costlier - Full list
Government notifies procedural changes in GST rules - details here Government notifies procedural changes in GST rules - details here

LATEST NEWS

Anil Singhvi's strategy on Aug 8: Support zone on Nifty is 17300-17350, Bank Nifty is 38050-38225

Dividend stocks, bonus share, stock split update: These 20 stocks will remain in focus this week | Full List

Has Nifty50 given breakout or this rally short-lived? Strategy and key levels to watch

Royal Enfield Hunter 350 launched in India; Check price, variants, details and more

Elon Musk dares Twitter CEO Parag Agrawal for open debate on fake accounts

Apple iPhone 14: Next-generation series of iPhones may face delay due to this reason

IRDAI to rename grievance redressal mechanism; complaints can be filed in regional languages soon

Vodafone Idea may increase tariffs at regular intervals; here's why

Auto Sector: From beaten-down to top performer of 2022, how this sector turned the tables, what lies ahead – Sunil Damania of MarketsMojo decodes

Domestic investors pip FPIs to hold all-time high in June 2022 quarter

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2022. India Dot Com Private Limited. All Rights Reserved.
LIVE TV