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Builders need to refund GST on cancelled flats
Builders will have to refund GST paid by home buyers in case he cancels the flat booked in the last fiscal and will be allowed to avail credit adjustment for such refunds, the tax department has said.
New Delhi: Builders will have to refund GST paid by home buyers in case he cancels the flat booked in the last fiscal and will be allowed to avail credit adjustment for such refunds, the tax department has said.
This clarification forms part of the FAQ released by the Central Board of Indirect Taxes and Customs (CBIC) on real estate sector. The FAQ has been issued to clear the air over the migration provision, which permits the real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.
For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC.
The FAQ said developer will be able to issue a 'Credit Note' to the buyer as per provisions of Section 34 in case of change in price or cancellation of booking. "Developer shall be able to take adjustment of tax paid in respect of the amount of such Credit Note," the FAQ said.
