Soon after the builders announced that there will be an increase in the prices of apartments thanks to the GST, the Tamil Nadu government has come to the rescue of the homebuyers and asked the builders to pass on the benefits of the lower tax burden by reducing prices or tax rate on instalments.
The State Housing and Urban Development Department has informed Builders Association of India (BAI) and Confederation of Real Estate Developers Association of India (CREDAI) to make sure that no builder or construction company asks the buyers to pay higher tax on instalments, reported The New Indian Express.
Taking into account that the department of revenue has clarified that the construction of apartments will have lower GST, a statement from The State Housing and Urban Development Department said, “Apart from these tax regimes, input tax credit of these taxes, which is [now] not allowed for payment of service tax, shall henceforth be available,” reported The Times of India.
This comes after the states and the Central Board of Excise and Customs received many complaints from the people who had booked flats, they were asked to pay the full amount before July 1, 2017 to avoid higher taxes.
Under the Goods and Services Tax, only the under-construction properties will be charged at 12 per cent and it will not be applicable for completed projects, as there are no indirect taxes applicable in the sale of such properties.
Other materials like major construction materials will not see major difference in tax rate, but cement will be taxed at 28 per cent from the earlier 20 to 24 per cent, paint, plaster, wallpaper will be taxed at 28 per cent from the average of 20 to 25 per cent and iron rods and pillars will be taxed at 18 per cent from the earlier 20 per cent, reported The Hindu.