Every now and then the Goods and Services Tax Act fall into a pit of problems and repercussions. And struggling to push the regime away from the complications the taxpayers have to suffer. The procedural hassles of the regime have perplexed the taxpayers and made the growth of the small businesses stagnant. Although the government managed to captivate more than 1 crore taxpayers for the registration, the number of return filers are unconvincing. And now that GST is applicable to almost everything, the confusion dominates the businesses involved in the sale/purchase of residential properties.
What would you prefer purchasing between a ready-to-occupy flat and an under construction property? You might say ready-to-occupy would be the best option to choose. However, it doesn’t matter that which property you invest in as there is no way to escape GST. If in case a seller has proposed a deal for the customers stating GST saved, then that could be an exception. Although, the GST rates in India 2016/2017 are levied on all of the business sectors in India.
The wrong notion
In the process of purchasing a home, it entirely depends upon the buyer that whether he wants to become a part from the beginning or inception of the project or move in when it’s finished. A mistaken aspect of the ready-to-occupy properties being exempt from the regime has wrongly been captivating the buyer’s minds. This way, the builders have been transferring GST load on the shoulders of the home-buyers. Before investing in a property, you must notice a fact that the builders are supposed to maintain a record of GST paid on the inputs.
Also, different percentage of GST rates in India 2016/2017 is applicable on the inputs that vary in the type. Thus, the builder becomes liable to pay goods and services tax on the inputs like cement, steel, iron, etc. that are the essential elements in the construction of a home. The builder ultimately receives the Input Tax Credit (ITC). But in order to profiteer, the builders ask the home-buyers to pay the GST amount incurred on the construction of the flat or apartment that the buyer is interested in. Also, GST is not something that would vary from the initiation of the construction of a building till it’s furnished. Hence, the notion on the buyer’s minds that investing in the early-bird house offers would incur more GST is completely baseless.
The most important thing that you must have before you go to purchase a residential property in the market is not money but awareness. Dig in for the rates applicable to the materials used for construction. Also, on a prior basis, ask the builder the amount of ITC received. Complying well with these points will make you invest smart and avoid any future taxation hassles. The act of the builders profiteering heavily due to the unawareness of the taxpayers have been increasing tremendously and must be put to an end now.