Firstpost
  • Home
  • Video Shows
    Vantage Firstpost America Firstpost Africa First Sports
  • World
    US News
  • Explainers
  • News
    India Opinion Cricket Tech Entertainment Sports Health Photostories
  • Asia Cup 2025
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
Trending:
  • Nepal protests
  • Nepal Protests Live
  • Vice-presidential elections
  • iPhone 17
  • IND vs PAK cricket
  • Israel-Hamas war
fp-logo
GST on houses: Nine months after rollout, confusion reigns supreme resulting in buyers feeling cheated
Whatsapp Facebook Twitter
Whatsapp Facebook Twitter
Apple Incorporated Modi ji Justin Trudeau Trending

Sections

  • Home
  • Live TV
  • Videos
  • Shows
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Health
  • Tech/Auto
  • Entertainment
  • Web Stories
  • Business
  • Impact Shorts

Shows

  • Vantage
  • Firstpost America
  • Firstpost Africa
  • First Sports
  • Fast and Factual
  • Between The Lines
  • Flashback
  • Live TV

Events

  • Raisina Dialogue
  • Independence Day
  • Champions Trophy
  • Delhi Elections 2025
  • Budget 2025
  • US Elections 2024
  • Firstpost Defence Summit
  • Home
  • Business
  • GST on houses: Nine months after rollout, confusion reigns supreme resulting in buyers feeling cheated

GST on houses: Nine months after rollout, confusion reigns supreme resulting in buyers feeling cheated

S Murlidharan • April 16, 2018, 11:34:16 IST
Whatsapp Facebook Twitter

Contrary to ill-informed or deliberate propaganda, there’s no escaping GST for those stepping in when a flat is ready.

Advertisement
Subscribe Join Us
Add as a preferred source on Google
Prefer
Firstpost
On
Google
GST on houses: Nine months after rollout, confusion reigns supreme resulting in buyers feeling cheated

The Goods and Services Tax (GST) is hardly a year old, having been rolled out on 1  July 2017. While it is still beset by procedural hassles, confusion reigns supreme in the market for residential houses. There exits a mistaken view that ready-to-occupy flats with occupancy certificates (OCs) are free from GST. And that builders charging a GST on such ready-to-occupy flats are cheating buyers.  In fact, a view is being propagated that it is better to purchase a ready-to-occupy flat as it is exempt from GST, as opposed to registering with a builder and making staggered payments for a unit, depending on the stages of construction. This is not true. GST is a destination based tax. Accordingly, the buck stops with the ultimate buyer. The tab has to be picked up by the buyer, whether he participates at the inception of the project or steps in when the flat is ready.  To be sure, there are advantages in stepping in when the flat is ready to occupy vis-à-vis being an early bird – immunity from the vagaries of the construction industry, immunity from being a victim on account of diversion of funds by a builder, among other things. [caption id=“attachment_3784361” align=“alignleft” width=“380”]Representational image. PTI Representational image. PTI[/caption] But contrary to ill-informed or deliberate propaganda, there is no escaping GST for those stepping in when a flat is ready unless of course the builder, unable to sell, reduces the price and markets the deal as ‘GST saved’. A builder is supposed to maintain a meticulous account of the GST paid on various inputs used in a project, as the GST rate on various construction materials is not uniform.  This is a direct consequence of the GST rate not being uniform which is the case in many countries that have embraced VAT of which GST is a variant. According to a report in The New Indian Express, different tax rates are applicable to materials used and services hired. This results in builders paying a different GST amount for each project. As builders are eventually transferring the GST burden on to home buyers, it is essential for people to take note of the following while buying a new home: Different GST rates are applicable on different construction material. For instance, cement is charged at 28 per cent, a works contract at 18 percent and bricks at five percent. As the GST varies from item to item and also from location to location, builders are calculating the whole amount and charging buyers, the newspaper added. The news item reproduced above is by and large true except that the GST rate cannot vary from location to location unless the builder is economical with the truth. The builder receives an input tax credit when he calls upon homebuyers to pay the GST incurred on the whole project.  And for the process, it is immaterial whether he has collected staggered payments or has been able to sell ready to occupy flats, or a combination of both as is common in the real estate market. The GST Council should clear the air with a media campaign in public interest. It must correct the notion that there is no GST on ready-to-occupy houses.  The confusion arises as the contract is either a works contract or a sale of immovable property. It’s a works contract for buyers who participate in the process at the construction stage and a sale for those who buy when the flat is ready. But this distinction does not make any difference to buyers’ tax fortunes. Whether it is a buyer participating at the inception or one stepping in when the flat is ready, both aren’t interested in bricks, paint, sanitary fittings, among the other things used in the flat. They enter into agreement to buy a habitable and completed residential house. And hence the incidence of GST on both should be the same, contrary to the view that early birds bear a greater burden. (The writer is a senior columnist and tweets @smurlidharan)

Tags
Construction Goods and Services Tax GST realty Real estate Residential property buildings OC ready to occupy flats occupancy certificate
End of Article
Latest News
Find us on YouTube
Subscribe
End of Article

Impact Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

The Tata Harrier EV and Mahindra XEV 9e are new electric SUVs in India. The Harrier EV has a modern, familiar design, while the XEV 9e features a bold, striking look. They cater to different preferences: the Harrier EV for subtle elegance and the XEV 9e for expressive ruggedness.

More Impact Shorts

Top Stories

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Who is CP Radhakrishnan, India's next vice-president?

Who is CP Radhakrishnan, India's next vice-president?

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Israel targets top Hamas leaders in Doha; Qatar, Iran condemn strike as violation of sovereignty

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Nepal: Oli to continue until new PM is sworn in, nation on edge as all branches of govt torched

Who is CP Radhakrishnan, India's next vice-president?

Who is CP Radhakrishnan, India's next vice-president?

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Israel informed US ahead of strikes on Hamas leaders in Doha, says White House

Top Shows

Vantage Firstpost America Firstpost Africa First Sports
Latest News About Firstpost
Most Searched Categories
  • Web Stories
  • World
  • India
  • Explainers
  • Opinion
  • Sports
  • Cricket
  • Tech/Auto
  • Entertainment
  • IPL 2025
NETWORK18 SITES
  • News18
  • Money Control
  • CNBC TV18
  • Forbes India
  • Advertise with us
  • Sitemap
Firstpost Logo

is on YouTube

Subscribe Now

Copyright @ 2024. Firstpost - All Rights Reserved

About Us Contact Us Privacy Policy Cookie Policy Terms Of Use
Home Video Shorts Live TV