Under the GST, there is a provision of tax concession in the real estate projects that the land value is less than 33%, but in some cases it can show the cost of builders and the reverse of the customer’s pocket. Rules of the refund are strict on the building cost and after a limit the builders refrain from refunding. In this, experts say that margins of builders will be reduced on flat construction in low-lying areas and it will not be able to pay customers at that level, which could get the full refund.
If the builder’s input tax credit is more than the output then he will not get the refund of the additional amount. In areas where the price of land will be within 33% rebate limit, the cost of building material and building services will be much higher. In such a situation, the refusal of the refund will change the attitude of the builders and they will not be able to give the same concessions to the customers, as expected in the case of the entire refund. Suppose land cost is 30% in total cost, in which input credit overflow will be done. Since the builder cannot charge more than 12 percent of the GST customer, in such a way that he will not get the extra amount of input credit, he will attempt to plagiarize at the base price of the property.
The most urban areas, the builders’ output tax is high and credit hopes are low. At the same time, the gains from GST to customers will not be more than 2-3% of total price They speculated that due to GST in Delhi-NCR, prices of flats could go upto 3% from neutral. In posh areas of South Delhi and Gurgaon, it is possible that prices remain neutral. But the government is also asking for cleanliness from certain provisions of GST A tax consultant from CREDAI-NCR has said that if the builder makes up 100 units by typing with a landlord, 60 of which are returned to land lord.
In such a case, for those 60 units, it is just a work-contractor, which will be 18 percent GST and get the full ITC. In the case of remaining 40 flats, which is to be sold to Bayer along with the land, it will pay 12% GST. But if the input is more than the credit output, it will not get additional refund. In such a situation, it is not certain how ITC will be calculated. Customers here will not get any benefit under the rules that have been revealed so far.