No benefit of ITC is passed by builders to customers
Haryana affordable housing policy projects making illegal profit by not passing benefit of ITC to customers. After rollout of GST builders increased burden on consumers by 12%/8% through imposing GST. Under sec 171 builder should pass the benefit of ITC to customers so that increase burden is reduced. 36 consumers from PYRAMID INFRATECH Gurgaon made complaint to Anti profiteering screening committee in Sept 2017. DGSG issued notice to builder on 15/12/2017 for detailed investigation. In Feb 2018 builder against demanded next instalment by adding 8% GST by not passing benefit of ITC to customers therefore more than 125 consumers again made complaint to Anti profiteering screening committee. Both the complaints were clubed by DGSG. Builder is not cooperation with DGSG by not providing required information. In this situation DGSG failed to complete detail investigation in three month . DGSG therefore took extension for another three months. Builder is still not cooperating with DGSG and continually exploiting consumers on name of GST. In our case DGSG seems helpless against builder and is unable to complete detail investigation in given time frame. If this is the situation then how Anti-profiteering committee will provide justice to so many consumers and why people will make complaints if justice is not provided in given time frame. How a builder works very easily without cooperating DGSG. more
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As per new GST rate is 1% in affordable housing from 1st MAY but PYRAMID INFRATECH is still raising 8% GST in new demand letter without ITC. How can we get our input tax credit from builder.. more
Jul 07
my builder also charged GST from me on the payments but credited ITC only against two installments. what is the procedure to check the books of builder whether proper credit has been given or not how to file complaint against the builder under section 171 of anti-profiteering against builder more
May 05
The transaction price does not include any GST and hence the input tax credit is not payable to the end consumers. If I am not wrong, the principle behind GST or even for that matter VAT was that lets assume Supplier A supplies some items to Supplier B at a price of Rs. 100/- basis plus tax of Rs. 10/-. Now supplier B supplies the product to Supplier C after value addition at a price of Rs. 110 plus Tax of Rs. 11/-. By charging Rs. 11/- as GST/VAT, he will get a credit of Rs. 10/- as tax paid to supplier A. Finally when the product is sold by the retailer to an end consumers at a price of Rs. 150/- plus Tax of Rs. 15/- , the retailer will get credit of tax paid by the retailer to his last supplier. Ideally this system of costing need to be followed by the business houses in the system of taxation and hence the input tax credit is not passed onto the end buyer. In other words if the costing is made on the basis or basic prices plus margins or value addition, the retailer will not pass on any input tax credit to the end buyer. I wish I am not wrong in my expression of the views. more
Apr 18
The concept of passing ITC benefit to consumers can be understand bu clarification issued by government
Date: 06.12.2017
PRESS NOTE
CLARIFICATION ON LEVY OF GST ON FLATS/ RESIDENTIAL COMPLEXES AND BUILDINGS
The Central Board of Excise & Customs, New Delhi and States have received several complaints that in view of the ‘works contract’ service tax rate under GST @ 12% in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before 1st July 2017 or to face higher tax incidence for payment made after 1st July, 2017. This is against the GST law. The issue is clarified as below:
1. Construction of flats, complex, buildings will have a lower incidence of GST as compared to a number of central and state indirect taxes suffered by them under the exist* regime.
2. Incidence of Central Excise duty, VAT, Entry Tax, etc. on construction material is currently borne by the builders, which they pass on to the customers as part of the price charged from them. This is not visible to the customer as it forms a part of the cost of the flat.
3. This will change under GST. Under GST, full input credit would be available for offsetting the GST rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat.
4 The builders are expected to pass on the benefits of lower tax burden due to input tax credit, under the GST regime to the buyers fly by way of reduced prices/ installments as illustrated below: (The price of Flat may increase/ decrease depending on the raw material inputs used)
Pre- GST (amount in Rs.) Post- GST (amount in Rs.)
Flat Price 3000000 Flat Price 3000000
Service Tax @ 4.5% 135000 GST @ 12% 360000
Vat @ 1.25% 37500 Approximate input tax credit is available for GST/CEX/VAT paid on Cement, MS Steel, Tiles, Paint and other taxable inputs used in construction.) (-) 286299
Total cost of the Flat 3172500 Total cost of the Flat 3073701
Reduction in Flat cost Rs. 98,799/- (Only indicative, not exact)
It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on installments to be received after imposition of GST. Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law. more
Date: 06.12.2017
PRESS NOTE
CLARIFICATION ON LEVY OF GST ON FLATS/ RESIDENTIAL COMPLEXES AND BUILDINGS
The Central Board of Excise & Customs, New Delhi and States have received several complaints that in view of the ‘works contract’ service tax rate under GST @ 12% in respect of under construction flats, complex etc, the people who have booked flats and made part payment are being asked to make entire payment before 1st July 2017 or to face higher tax incidence for payment made after 1st July, 2017. This is against the GST law. The issue is clarified as below:
1. Construction of flats, complex, buildings will have a lower incidence of GST as compared to a number of central and state indirect taxes suffered by them under the exist* regime.
2. Incidence of Central Excise duty, VAT, Entry Tax, etc. on construction material is currently borne by the builders, which they pass on to the customers as part of the price charged from them. This is not visible to the customer as it forms a part of the cost of the flat.
3. This will change under GST. Under GST, full input credit would be available for offsetting the GST rate of 12%. As a result, the input taxes embedded in the flat will not (& should not) form a part of the cost of the flat.
4 The builders are expected to pass on the benefits of lower tax burden due to input tax credit, under the GST regime to the buyers fly by way of reduced prices/ installments as illustrated below: (The price of Flat may increase/ decrease depending on the raw material inputs used)
Pre- GST (amount in Rs.) Post- GST (amount in Rs.)
Flat Price 3000000 Flat Price 3000000
Service Tax @ 4.5% 135000 GST @ 12% 360000
Vat @ 1.25% 37500 Approximate input tax credit is available for GST/CEX/VAT paid on Cement, MS Steel, Tiles, Paint and other taxable inputs used in construction.) (-) 286299
Total cost of the Flat 3172500 Total cost of the Flat 3073701
Reduction in Flat cost Rs. 98,799/- (Only indicative, not exact)
It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher tax rate on installments to be received after imposition of GST. Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law. more
Apr 18
In case the retailer or the business house takes basic price plus tax plus margin as the transaction price to the consumer and then charges tax on the transaction price so arrived, the business practices of the retailer or the business house is unfair trade practice. more
Apr 18
The example of Supplier B to Supplier C is further clarified as Supplier B purchased at a price of Rs. 100/- plus Rs. 10/- Tax. Supplier B sells at Rs. 100+ Rs. 10 as value addition and profit i.e Rs. 110/- plus Rs.11/- as tax and billed to Supplier C as Rs.110/- plus tax of Rs.11/-. While he paid Rs.110/- to Supplier A and charged as Rs. 121/- to Supplier C out of which he paid actually Rs.11/- as tax in which he has taken the credit of Rs.10/- as tax paid to Supplier A. In this transaction he paid Rs.11/- and charged Rs.120/- net i.e he charged net profit and value addition of Rs.10/- only and this is the way the cycle keep on moving. more
Apr 18
The rules for real estate framed for restricting builders in harassing the public is not at all effective. Let there be improved guidelines. more
Apr 17
