Hi All ,

I have already booked a flat with a premium builder in April 2017 .I am in process of doing Stamp duty and registration in the next couple of days .However now since GST getting applied as 12 % ,my budget is getting shifted higher and little out of budget as per the decided amount earlier .I am confused if i should go for the stamp duty before 01 July or after .Also since GST will get applicable from 01 July ,wont i get input tax credit as per the finance department so that the budget is not stretched . Please suggest .
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  • I am not sure, If builders are really honest to pay you back Input Tax credit...
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  • They should as per the non-profiteering law -section 171
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  • Originally Posted by rohan.87
    Hi All ,

    I have already booked a flat with a premium builder in April 2017 .I am in process of doing Stamp duty and registration in the next couple of days .However now since GST getting applied as 12 % ,my budget is getting shifted higher and little out of budget as per the decided amount earlier .I am confused if i should go for the stamp duty before 01 July or after .Also since GST will get applicable from 01 July ,wont i get input tax credit as per the finance department so that the budget is not stretched . Please suggest .


    You will not get input credit.
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  • Builders dont commit about paying the credit to buyers as of now and if yes still there is no clarity about how much credit they will pass on, so it would be good to hold on for sometime.
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  • Press Information Bureau
    Government of India
    Ministry of Finance
    15-June-2017 17:05 IST

    *Reduced Liability of Tax on complex, building, flat etc. under GST*

    The CBEC and States have received several complaints that in view of the works contract service tax rate under GST at 12% in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before 1stJuly 2017 or to face higher tax incidence for payment made after 1st July 2017. This is against the GST law. The issue is clarified as below:-



    1. Construction of flats, complex, buildings will have a lower incidence of GST as compared to a plethora of central and state indirect taxes suffered by them under the existing regime.

    2. Central Excise duty is payable on most construction material @12.5%. It is higher in case of cement. In addition, VAT is also payable on construction material @12.5% to 14.5% in most of the States. In addition, construction material also presently suffer Entry Tax levied by the States. Input Tax Credit of the above taxes is not currently allowed for payment of Service Tax. Credit of these taxes is also not available for payment of VAT on construction of flats etc. under composition scheme. Thus, there is cascading of input taxes on constructed flats, etc.

    3. As a result, incidence of Central Excise duty, VAT, Entry Tax, etc. on construction material is also currently borne by the builders, which they pass on to the customers as part of the price charged from them. This is not visible to the customer as it forms a part of the cost of the flat.

    4. The current headline rate of service tax on construction of flats, residences, offices etc. is 4.5%. Over and above this, VAT @1% under composition scheme is also charged. The buyer only looks at the headline rate of 5.5%. In other cities/states, where VAT is levied under the composition scheme @2% or above, the headline rate visible to the customer is above 6.5%. What the customer does not see is the embedded taxes on account of cascading and sticking of input taxes in the cost of the flat, etc.

    5. This will change under GST. Under GST, full input credit would be available for offsetting the headline rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat. The input credits should take care of the headline rate of 12% and it is for this reason that refund of overflow of input tax credits to the builder has been disallowed.

    6. The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/ installments. It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on instalments to be received after imposition of GST.

    7. Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law.
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  • Please define "Premium Builder" , ...... and please dont get into GST wave.. go for a buy only if makes sense to you, GST wont bring price down much..
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    1 Comments
    • rohan.872 years ago
      I know GST wont bring the prices down .What i want is that it shouldn't shoot up and extend my budget .The total cost should remain neutral .
  • I have purchased a new flat in talegaon & have paid almost 70% of the amount including stamp duty registration & Vat. Registration papers have been processed but builder is insisting to make rest of the payment before 01 july 2017 to avoid extra burden of almost 80k to 90k on us is what he says. Agreement value is 1850000. Please advise as my loan is yet to approve
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  • Currently, none knows about clarity on GST. many builders are asking for money before 01 July 2017. Nobody knows payment post 1 July will be good idea or bad. I know one thing HOPE CHANGES EVERYTHING
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  • Latest that i heard is JOINT VENTURE under construction flats would be coming under 18 % GST slab
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