Clarifying on real estate buyers' interest, the finance ministry on Saturday said that real estate buyers who buy a property for which completion certificate has been issued at the time of sale, there shall arise no GST implication.
But the same case is invalidated when buying real estate property i.e. either under the construction phase or a ready to move in accommodation for which the completion certificate has not been issued.
The ministry in a statement released said, "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".
For the different affordable housing projects such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of state governments, the ministry clarified that these projects attract 8% GST which builders can adjust 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.
"Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down," it said.
So, consequently builders across the country have been asked to cut down prices on properties to pass on the cut in GST rate to end consumer.