Government asks builders to pass on GST benefits to home buyers

The government has warned builders of stringent action for asking customers to make entire payment before July 1, the day of GST roll out. It asked them to pass on the benefits of lower tax under the new regime by way of reduced prices or installments.

In a release issued in New Delhi yesterday, the Finance Ministry said that construction of flats, complex, buildings will have a lower incidence of Goods and Services Tax as compared to a plethora of central and state indirect taxes suffered by them currently.

Advising 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 the GST. The Centre



warned that if any builder resorts to such practices, the same can be deemed to be profiteering under section 171 of GST law.

The Tax department and states have received complaints that the people who have booked flats and made part payment are being asked to make entire payment before July 1 or to face higher tax incidence for payment made there after. The Ministry said, this is against the GST law.

The works contract service tax rate under GST is 12 per cent for under-construction flats, complexes and buildings. A committee would be set up to look into the complaints with regard to the anti-profiteering clause that seeks to prevent companies from making undue gains post GST rollout.