New Delhi, 5th July 2018: As per the latest real estate news, some of the potential home buyers have been found inventing innovative ways to overlook the 12% GST payment levied on the under construction apartments. The report further says that according to the builders, levying GST on the under construction projects is keeping the prospective purchasers away from purchasing an apartment.
Know How Homebuyers Skip GST charge:
If sources are to be believed then some of the many builders are accused of helping their potential buyers in avoiding the GST payment. 8% GST has to be paid by the home buyers belong to the affordable housing segment i.e. the homes having up to 60 Square Meter carpet area. And, 12% GST has to be paid by the home buyers on the under construction flats purchases exempted from the affordable housing segment. No GST is levied on any completed project with Occupation Certificate. A builder having under construction real estate projects in the eastern suburbs described the entire process taking place as:
Once a buyer pays the booking amount, the builder represents it to the law as a loan received from the buyer for one of its subsidiary company and will be paid back as ascertained between the builder and the buyer. After completing the construction of the project that the buyer has booked and obtaining the Occupation Certificate, the booking amount which has been shown as a loan amount is paid back to the buyer with interest. Later on, the buyer pays back the entire amount to the construction firm as there is no GST levied on complete projects.
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It has been also recorded that some builders have gone far away to circumvent paying the GST. They use to collect the booking amount from their project buyers into a different person or company account and once the construction of the project gets complete and it obtains the Occupation Certificate, they transfer the received amount against the sale of an apartment. Some real estate expert addressed this process as a dangerous one because any uncertain delay can hit the project completion and that would make the builders fall under their own trap.
According to the real estate news India, an undeclared percentage of the builders revealed that potential buyers demand to sign a Letter of Intent to block the under construction apartment they want to buy until its completion so they can save the GST payment and pay the amount post completion. Builders should be alert in this case as Letter of Intent doesn’t have any legal coverage and if the prospective buyer backs out any day, the builder can’t do anything about it.
While some of the builders and buyers are innovating new ways to avoid GST on a regular basis, there are builders who claim that they don’t have to put this into practice yet as their under construction sales are steadily strong and buyers have no problem in paying GST as they are aware of the benefits they will get in return in form of input credits in the pricing.
Author: Somdeepa Bhattacharjee
Somdeepa Bhattacharjee has a total experience of five years in the Content Editorial, Online Community and Internet Marketing domains. As a part of the content team of a3solutions.in, she develops research-oriented stories and News Articles on recent market trends. She has a proven strong analytical skill in her Articles which help readers to understand real time scenario of Realty Market. In her free time, Somdeepa engages in Blogging, Trekking, Reading Classics and Photography. She really fond of Entrepreneurship, Travelling and Foods.