FinMin asks builders to pass benefits to buyers
The finance ministry on Sunday said developers should pass on any reduction in prices of under-construction houses (due to input tax credits) to buyers after the goods and services tax (GST) is introduced next month.
It has asked the housing department to communicate to states for action against any forcing by builders on buyers of such houses to pay the full amount before July 1, on the pretext of GST.
“This is wrong,” Finance Minister Arun Jaitley told reporters when they said builders were apparently doing this, despite a clarification by his finance ministry on Thursday.
He said the refunds given on taxes for inputs should lead to price reductions in the sector. “The entire price reduction should not be pocketed by developers,” he said.
The statement came on a day when the GST Council approved anti-profiteering measures.
“We have also requested the Housing and Urban Poverty Alleviation secretary to communicate to states in this regard,” said revenue secretary Hasmukh Adhia.
Praveen Jain, president at NAREDCO, an industry body of real estate developers: “Developers should charge at today’s rates not at GST rates. I feel there is more impact in high-end properties.” Rajan Bandelkar, vice-president, National Real Estate Development Council (NAREDCO), West said that buyers pay as per progress of construction. “They do not pay in advance,” he said.
The GST Council had brought the realty sector under GST partially through works contracts. These will be taxed at 12 per cent under the new indirect tax regime.
The Central Board of Excise and Customs (CBEC) had earlier said that it and the states had got complaints that in view of this tax, people who’d booked flats and made part-payment were being asked to deposit the entire amount for the house before July 1. Or, they were being told, they’d face a higher tax for payment made after July 1.
CBEC warned that this was against the GST law.
Meanwhile, industry body Confederation of Indian Industry on Sunday said India Inc was ready for the GST implementation from July 1, as the new indirect tax regime will contribute significantly towards economic growth, job creation and exports expansion.