Home buyers will now get GST refunded by builders if they cancel the flat booked before April 1st, 2019. Builders can avail credit adjustment for such refunds made.
We know that the real estate dealers are given two options
1. Pay 5% GST for residential housing, 1% for affordable housing without ITC.
2. Pay 12% GST for residential housing, 8% for affordable housing with ITC
If the builder opts for 12% GST.
Let’s say a flat costs Rs.10 lakh.
So the house buyer has to pay Rs. 11.20 lakhs (10 lakhs + 1.20 lakhs ) to the builder.
Now, if he cancels the flat booked on or before April 1, 2019, the builder has to refund 1.20 lakhs to the home buyer and the builder is eligible to make tax adjustment of Rs 1.20 lakh.
In case the builder changes his tax scheme:
In case a real estate developer has collected 12% GST from home buyers, but later opted for 5% rate, the builder will have to refund the extra tax (7%) collected to the buyer.
Have an opinion about this new GST rule? Please comment below.
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