CHENNAI: As the country enters a new tax regime under the Goods and Services Tax from July 1, the State Housing and Urban Development Department has asked developers and builders to pass on benefits of the lower tax burden to buyers by reducing prices or tax rate on installments.
The department urged Builders Association of India (BAI) and Confederation of Real Estate Developers Association of India (CREDAI) to ensure that no builder or construction company asked customers to pay a high tax rate on installments to be received after imposition of GST.
This comes in the wake of States and the Central Board of Excise and Customs (CBEC) receiving complaints that those who have booked flats and have made part payments are being pressured to make the entire payment before July 1 to avoid higher tax incidence once GST is implemented.
The statement from housing department said the revenue department had clarified that construction of flats, complexes, and buildings will have comparatively a lower incidence of GST when compared to a plethora of Central and State indirect taxes under the existing tax regime. Apart from these, Input Tax Credit of these taxes, which is not currently allowed for payment of Service Tax, shall henceforth be available.
In the current tax regimes, the incidence of Central Excise duty, VAT, Entry Tax, etc. on construction materials are borne by builders, which they later pass on to customers as part of the price charged from them. This is obviously not visible to the customer as it forms a part of the cost of the flat. The customer does not see embedded taxes on account of cascading and sticking of input taxes.