Reduced tax liability on homes under GST
GST
Dated:- 9-8-2017
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Document 1
davp 15502/13/0144/1718
JAGO
GRAHAK
JAGO
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GST
NATION
TAX
MARKET
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GOOD NEWS
FOR
HOME
BUYERS
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Reduced tax liability
on homes under GST
The CBEC and States have received many 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 before 1st July, 2017, are being asked to
bear higher tax incidence for payments made after 1st July, 2017. This is against the GST law,
as explained below.
Construction of flats, complex, buildings have a lower incidence of GST as compared to a
plet
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ction material was
earlier being borne by the builders, which they passed on to the customers as part of the price
charged from them. This was not visible to the customer as it formed a part of the cost of the flat.
• The earlier headline rate of service tax on construction of flats, residences, offices etc. was 4.5%. Over and above
this, VAT @1% under composition scheme was also charged. The buyer only looked at the headline rate of 5.5%.
In other Cities/States, where VAT was being levied under the composition scheme @2% or above, the headline
rate visible to the customer was above 6.5%. What the customer did not see is the embedded taxes on account of
cascading and sticking of input taxes in the cost of the flat etc.
•
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