NEW DELHI: If a buyer had booked a flat before April 1, 2019 and the developer has subsequently cancelled it, the latter will now have to refund the whole GST amount paid by the customer during the time of booking.
The order came as a clarification form which was part of a Frequently Asked Questions (FAQ) list released by the Central Board of Indirect Taxes and Customs on the real estate sector. However, the tax department has allowed the developer to avail credit adjustment for such refunds.
Giving an example, tax authorities said that a developer who paid a GST of Rs 1.20 lakh at the rate of 12 per cent in respect of a gross booking amount of Rs 10 lakh before April 1, 2019 shall be entitled to take adjustment of tax to the tune of Rs 1.20 lakh upon cancellation of the said booking on or after April 1, 2019, against other GST liabilities.
For ongoing projects, builders have been given the option to either continue at the 12 per cent GST slab (8 per cent for affordable housing) with input tax credit (ITC), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC. Developers have to communicate their choice to their respective jurisdictional officers before May 10, failing which they will be deemed to have migrated to new tax rates.
The FAQ had also clarified that once a developer opts for either the old GST regime or the new one for ongoing projects manually with the respective jurisdictional commissioner, he will not be permitted to modify it.
Another confusion the CBIC cleared was in the case of Transfer of Development Right, where it said that GST would not apply on agreements entered into on or after April 1, 2019.