The ITC benefits now available to the builders under GST may be passed on to the flat/property buyers in many ways. Some of them are: reducing the prices of the flats/ properties. by giving discounts to the buyers. by crediting/ paying the ITC available, claimed and deducted from output liability to the account of the flat/property buyer.
This was the first instance of a developer attracting a penalty for not passing on GST benefits. Passing its order on 36 applications filed by 102 homebuyers, the National Anti-Profiteering Authority (NAPA) on September 18 said the builder was liable to pass on the benefit made under the new tax regime’s input tax credit (itc) system, and it was not that the builder was paying anything from his own pocket.
At the moment, if you are buying a property, you would have to pay the Service Tax of about 4.5 per cent and a Value-Added Tax or VAT of 1.05 per cent. If you are waiting for GST to roll out in all its might, you would not be paying at this rate but at 12 per cent, which means yes, property prices would be higher.
While GST may not burden home-buyers if a developer passes on its benefits, experts say implications depend on project cost and its stage of completion Along with a number of policy reforms, the real estate sector is believed to have an impact due to the Goods and Services Tax (GST).
A repo rate cut would have a positive impact on the overall economy and the realty sector since it leads to lower borrowing costs for home buyers. With low construction costs borne by developers post.
But the caveat is that consumers are opting for completed projects with no risk of delay or shortcomings and no GST. pass on to the consumers. Even if there is a rate cut by the RBI tomorrow, it.
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Currently the GST on home sales is 12 per cent, and the GST a builder can apply on sale of property with input credit will not surpass 6-8 per cent. As such, homebuyers stand to gain. Builders say this means a form of discount for homebuyers.