The Central Board of Excise and Customs (CBEC) has clarified that the construction of flats, complex, buildings will have a lower incidence of GST as compared to a plethora of central and state indirect taxes imposed on them under the existing regime.
"The CBEC and States have received several complaints that in view of the works contract service tax rate under GST at 12% in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before 1st July 2017 or to face higher tax incidence for payment made after 1st July 2017. This is against the GST law," CBEC said in an official statement.
Explaining the tax structure at present and the incidence of various taxes on real estate and construction space, CBEC the national agency responsible for administering service tax and taxes like customs and excise said,"Central Excise duty is payable on most construction material at 12.5 per cent. It is higher in case of cement. In addition, VAT is also payable on construction material at 12.5 per cent to 14.5 per cent in most of the states. In addition, construction material also presently suffer Entry Tax levied by the states. Input Tax Credit of the above taxes is not currently allowed for payment of Service Tax. Credit of these taxes is also not available for payment of VAT on construction of flats etc. under composition scheme. Thus, there is cascading of input taxes on constructed flats. As a result, incidence of Central Excise duty, VAT, Entry Tax, etc. on construction material is also currently borne by the builders, which they pass on to the customers as part of the price charged from them. This is not visible to the customer as it forms a part of the cost of the flat".
The current headline rate of service tax on construction of flats, residences, offices is 4.5 per cent. Over and above this, VAT at 1 per cent under composition scheme is also charged.
"The buyer only looks at the headline rate of 5.5 per cent. In other cities and states, where VAT is levied under the composition scheme at 2 per cent or above, the headline rate visible to the customer is above 6.5 per cent. What the customer does not see is the embedded taxes on account of cascading and sticking of input taxes in the cost of the flat," CBEC said.
"Under GST, full input credit would be available for offsetting the headline rate of 12 per cent. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat. The input credits should take care of the headline rate of 12 per cent and it is for this reason that refund of overflow of input tax credits to the builder has been disallowed," CBEC, the agency under Finance Ministry clarified.
CBEC further stated that the builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices or in installments. CBEC has advised all builders and construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on installments to be received after imposition of GST and if any builder resorts to such practice, the same can be deemed to be profiteering under Section 171 of GST law.
"There is no input credit available for land. So for affordable properties say under Rs 3000 per sq ft, there will not be much impact of GST as the component of land is only say 20%, but the component of other inputs on which input credit is available is substantial. But in high price properties say Rs 5000 per sq ft and above the component of land is nearly 40 to 50% and input credit is available only on construction which say 30 to 40% of the total output price, the input credit is not enough to cover the 12% GST on output" Pankaj Bajaj, MD, Eldeco Infrastructure said
The GST Council in its meeting earlier this month, had agreed on the broad principles of anti-profiteering rules. As per the rules agreed upon, a standing committee would be set up to take up cases of companies or traders found making undue profit under the GST regime by not passing on the benefits of lower tax incidence to the buyer because of GST. The Council is working on finalising the penalty and action to be taken against such defaulting companies or traders.
AYURA 【洗淨與入浴】律化潔膚皂的商品介紹 AYURA,洗淨與入浴,律化潔膚皂
Chelsea have set their stall out for this season – thumping AC Milan 5-0. The star man for the Blues was undoubtedly Nicolas Anelka who put four past the hapless Milan keeper. Anelka hits four as Chelsea thrash AC Milan in Moscow
Former Bundesliga champion 1860 Munich were relegated from Germany’s second division on Tuesday in a game that was held up for 15 minutes because of violence from angry fans. 1860 Munich drop into third tier of German football amid chaos at Allianz Arena as angry fans try to storm pitch… and ex-Liverpool chief Ian Ayre resigns hours before the match begins
Cristiano Ronaldo, Karim Benzema and Gareth Bale are yet to hit top form in the league this campaign, with Real fifth in La Liga and seven points off leaders and rivals Barcelona. Real Madrid target Edinson Cavani for January move with PSG striker ‘going crazy’ and keen to leave Ligue 1 side
Oh my goodness! an amazing article dude. Thank you Nevertheless I am experiencing issue with ur rss . Don’t know why Unable to subscribe to it. Is there anybody getting equivalent rss problem? Anyone who is aware of kindly respond. Thnkx
I appreciate you sharing this blog article. Much obliged.
kjfxdiusrt,A fascinating discussion is definitely worth comment. I do think that you ought to publish more on this topic, it may not be a taboo uhfozjpsshw,subject but generally folks don’t talk about such subjects. To the next! All the best!!
Read our in-depth iPhone XS Max review
Read our hands-on iPhone XR review
link
Read our hands-on Apple Watch 4 review
iPhone XS price and release date
iPhone XS
zwudjsrde,Definitely believe that which you said. Your favourite justification appeared to be on the net the simplest thing to remember of.
ejijfdmeblb,Thanks for sharing such an amazing blog. I am so happy found this informative blog.
ilvnwc,Hi there, just wanted to say, I liked this article. It was helpful. Keep on posting!
clygrdsb,Wonderful one thank you so much !
canadian viagra online
bqcelgj,Hi there, just wanted to say, I liked this article. It was helpful. Keep on posting!
Great weblog here! Also your web site lots up very fast! What web host are you using? Can I get your affiliate hyperlink in your host? I desire my website loaded up as quickly as yours lol
Today, I went to the beach with my children. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is completely off topic but I had to tell someone!
I like what you guys are up also. Such intelligent work and reporting! Carry on the superb works guys I have incorporated you guys to my blogroll. I think it’ll improve the value of my site
Usually I don’t read article on blogs, but I would like to say that this write-up very forced me to try and do it! Your writing style has been amazed me. Thanks, very nice post.
Enjoyed examining this, very good stuff, thanks .
hpjbjruvtll,Your blog was informative and valuable to me. Thanks for sharing.
I’m impressed, I must say. Genuinely rarely can i encounter a blog that’s both educative and entertaining, and without a doubt, you’ve hit the nail to the head. Your idea is outstanding; the pain is an issue that there are not enough individuals are speaking intelligently about. We are delighted that we stumbled across this inside my try to find some thing about it.
I work here buy amoxicillin online overnight delivery The CPPIB said its assets rose to C$188.9 billion in thefirst fiscal quarter from C$183.3 billion three months ago, asit notched a gross investment return of just 1.1 percent amidrising interest rates and bumpy equity markets.
khivqoc,Wonderful one thank you so much !
I like this site very much so much superb info .
Thank you for the auspicious writeup. It in fact was a amusement account it. Look advanced to far added agreeable from you! However, how can we communicate?
Wow, amazing blog format! How lengthy have you ever been running a blog for? you made blogging glance easy. The full glance of your web site is wonderful, let alone the content!
esffpcnprnf,If you have any struggle to download KineMaster for PC just visit this site.
rfloxlgh,Thanks for this useful information, Really amazing. Thanks again. I LOve your BloG
adxcpddto,Definitely believe that which you said. Your favourite justification appeared to be on the net the simplest thing to remember of.
WONDERFUL Post.thanks for share..extra wait .. …
hqmeol,We have a team of experts who could get you the correct settings for Bellsouth net email login through which, you can easily configure your email account with MS Outlook.
ypdktwjslnw,Your blog was informative and valuable to me. Thanks for sharing.
whazbw,This website truly has alll of the information and facts I wanted about this subject and didn?t know who to ask.
ybgasymonn,If you are going for best contents like I do, just go to see this web page daily because it offers quality contents, thanks!
jzoqdt,This website truly has alll of the information and facts I wanted about this subject and didn?t know who to ask.
okzochdw,A very good informative article. I’ve bookmarked your website and will be checking back in future!
uregqsio,We have a team of experts who could get you the correct settings for Bellsouth net email login through which, you can easily configure your email account with MS Outlook.
tdqjacpxd Yeezy,Waw! Its really great and wonderful ever i found. Thank you for sharing this info.