No clarity on GST over completed flats

NAGPUR: Even as completed properties for which an occupancy certificate has been secured from a municipal body are exempted from GST, a section of builders continue to levy tax on it. Builders say there is a general confusion over applicability of the tax, especially on projects where the occupancy certificate has been secured for part of the scheme.

A large section of builders continue to levy GST even on completed flats in case the occupancy certificate is issued for part of the project. However, officials in erstwhile service tax department now in-charge of GST told TOI, the tax will only apply to amount paid for flats under construction. “If a person buys a ready to move in flat, GST is not applicable. So, even if the occupancy certificate has been issued only for part of the building scheme, the ready units, for the document has been secured, will not be taxed,” officials said.

TOI came across builders, including those associated to Confederation of Real Estate Developers of India (CREDAI), who said they charged the tax in case the occupancy certificate was issued for part of the project. They admitted that there was confusion in this regard.

Malvika Saraf, a college teacher, was asked to shell out 12% extra as GST, though her building was ready to move in. The builder had constructed the flat at the site in New Narendra Nagar before GST had set in. “During the initial negotiations, the builder said 12% GST will have to be levied even though the flat was already built in pre-GST era. When countered, he changed the stance saying that even the 12% was part of the overall deal,” said Saraf, who finally preferred not to buy the property.

The president of CREDAI Anil Nair and secretary Gaurav Agarwala said there is a confusion in regards of payment of the tax.

Agarwala said, at times only part of the scheme is completed, which can include only a few blocks or wings. In order to avoid confusion, he has been levying the tax on the customer. To ensure that the customers is not taxed, the amount taken as GST is also adjusted as discount from the final price of the deal.

Nair said, “Confusion prevails for cases where in a single vertical block, the certificate is issued to part of the floors. It is not certain if such properties are spared of the tax also. In my opinion, GST is applicable on the entire building in such a case,” he said.

An officer handing GST in erstwhile service tax department, however, said it is clear that ready units with occupancy certificate cannot be taxed. “In the normal course, certificate are issued to entire block and not floor-wise,” he said.