HYDERABAD: Most companies and builders are failing to pass the (ITC) availed by them to the buyers after the completion of the projects. According to officials city-based Praneeth Group has stood as an example by directly passing on input tax credit availed to the buyers after the completion of the projects.
“After registration and obtaining occupancy certificate, we calculated the GST collected and amounts received and also calculated the input tax credit availed. Later we passed this on proportionately to the buyers for a project in Bachupally,” Praneeth Group MD Narendra Kumar Kamaraju told TOI.
GST anti-profiteering officials said that builders shall pass on the benefits of the lower tax burden to the buyers of property by way of reduced prices or instalments, where effective tax rate has been down.
Confederation of Developers’ Associations of India (CREDAI) has said that builders are adopting different methods to pass on the input tax credit availed to the buyers.
As per the act, major construction materials, capital goods and input services used for the construction of flats, houses attracted GST of 18 per cent or more. However, ITC is available on this and the weighted average of ITC incidence is approximately 8 per cent to10 per cent. “Due to this it is expected that the cost of the complex, buildings, flats would not have gone up due to the implementation of GST,” said a GST official.
“Most builders are passing on the benefit of ITC by the way of giving GST discount and other discounts by reducing the price. In some cases, they are collecting less GST around 8 to 9 per cent. There is no clarity from the central government how input tax credit shall be passed on,” CREDAI Telangana president G Ram Reddy told TOI.
There is no GST on the sale of complex, building and ready to move-in flats where the sale takes place after the issue of completion certificate by the competent authority. GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale.