The Finance Ministry, on December 8, 2018, said the GST will not be levied on buyers of real estate properties, for which the completion certificate is issued at the time of sale. However, the Goods and Services Tax (GST) will be applicable on sale of under-construction property or ready-to-move-in flats, where the completion certificate is not issued at the time of sale, it said.
The ministry also asked the builders to reduce the prices of properties, by passing on the benefit of lower GST rates. “It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready-to-move-in flats, where the sale takes place after the issue of the completion certificate by the competent authority,” the ministry said in a statement.
It further said affordable housing projects like Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of state governments, attract eight per cent GST, which can be adjusted by the builders against its accumulated input tax credit (ITC). “For such (affordable housing) projects, after offsetting ITC, the builder or developer in most cases will not be required to pay GST in cash, as the builder would have enough ITC in his books of account to pay the output GST,” the ministry said.
It said the cost of housing projects or complexes or flats, other than those in affordable segment, would not have gone up, due to the implementation of the GST. “Builders are also required to pass on the benefits of lower tax burden to the buyers of property, by way of reduced prices/ installments, where effective tax rate has been down,” it said.