In a major relief to flat buyers, the Ministry of Finance made it clear that Goods and Service Tax ( GST) will not be levied on buyers of real estate properties for which completion certificate is issued at the time of sale.
However, Goods and Services Tax (GST) is applicable on sale of under-construction property or ready to move in flats where completion certificate is not issued at the time of sale.
The ministry also asked the builders to reduce the prices of properties by passing on the benefit of lower GST rate.
"It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready to move in flats where sale takes place after issue of completion certificate by the competent authority," the ministry said in a statement.
It further said affordable housing projects like Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Governments attracts 8 per cent GST, which can be adjusted by the builders against its accumulated input tax credit (ITC).
For such (affordable housing) projects, after offsetting ITC, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST," the Ministry said. It said cost of housing projects or complexes or flats, other than those in affordable segment, would not have gone up due to implementation of GST.
Presently, residential construction services, will invite GST at the rate of 12 per cent, which will apply to developers selling residential units before completion of construction to the home buyers.