Navi Mumbai observes an ascending shift
In February this year, the Goods and Services Tax Council reduced the GST on under-construction flats to 5% from 12% and for affordable houses it was cut to 1% from 8% earlier. But if you are already paying installments on your under-construction flat, then GST on the remaining payment will depend on your builder's decision.
Under the revised regime, the GST council decided to take away the benefit of the input tax credit (ITC) on inputs like cement, paints, steel as builders were not passing these benefits to their customers.
Now, the government has clarified in a 16-page FAQ under which circumstances flat buyers can hope to move to a 5% or 1% rate on the remaining portion of the under-construction flat. According to the FAQ, if you had paid 40% of the value of the flat up to March 31 and your builder decides to move to the new regime, you can get the new rate. But in case the builder sticks to the older regime in which he used to get ITC, then you can not get the benefit of reduced rates.
The 16-page FAQ also mentioned that builders have been given a one-time option to move to the revamped structure but those who do not submit their option by Friday, will automatically move to the 5% rate without ITC and 1% in case of affordable homes.
The government reiterated that 80% of the value of goods and services have to be sourced from registered suppliers. “For calculating this threshold, the value of services by way of grant of development rights, long term lease of land, floor space index, or the value of electricity, high speed diesel, motor spirit and natural gas used in construction of residential apartments in a project shall be excluded,” the FAQs issued by the government said.