With the housing minister Venkaiah Naidu asking the chief ministers of all the states to make sure that the buyers are not levied with extra tax, the investors around the country have actually heaved a big sigh of relief. The minister has given a strong assurance to all the home buyers that the developers will not call for higher tax after the GST comes into play from 1st July, 2017.
According to the minister, the home buyers who have already booked flats and made part payments to complete the transaction before July 1 will also not be out of this stance. A request in the form of an appeal has been raised to the builders and it’s expected that they will stick to the median to make the most out of the imposition of GST Bills. Even, high taxes on instalments are denied by the minister for the welfare of the home buyers.
Also, with the minister clarifying that GST will lessen the tax outgo for payments made after July, the home buyers who were giving it a second thought to buy their dream home have now likely to become quite convinced and swayed. He has also added that construction of residential buildings and flats will experience a lower frequency of GST compared to a number of state as well as central indirect taxes.
Moreover, the ministry has also confirmed that if any developer takes recourse to such practice, it will be considered as exploiting under section 171 of GST law, thereby making them answerable at a number of contexts. The current tax regimes include a number of a aspects namely entry tax, value added tax, central excise duty etc. These tolls on the construction materials are put up with the developers which they impart on the home buyers as part of the entire duty. According to the ministry, this practice should come to a sheer end.
Nevertheless, as soon as GST will pave in the scenario, the full input credit would be offered for equalizing the headline rate of 12% and this is the main reason why the reimburse or repayment of input tax credits to the developer has been outlawed. CREDAI (Confederation of Real Estate Developers Association of India) has also recommended the Government to mull over putting up with the moderation of land value in GST regime which, in turn, will make sure that the housing prices don’t go up.
Also, the fact that multiple taxation is still there in the GST regime for the real estate sector has made the ministry think over the issue and the limit imposed on the competence of the developers is expected to diminish the additional tax burden on the home buyers.