GST Consultants in Chennai | Kanakkupillai

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Impact of New GST Regime on Real Estate Companies
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Increase in Input Tax Credit
A recent clarification by the indirect tax
department may leave a loophole in the goods and
services tax (GST) system by enabling the real
estate companies to claim higher input tax credit
than they are entitled to.
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Realtors can opt for old GST rates

• The GST Council had given the option to real
  estate companies to either opt for old rates of
  12 per cent (for residential) and 8 per cent
  (affordable housing) with input tax credit (ITC)
  benefits or the new tax rates of 5 per cent for
  residential units and 1 per cent for affordable
  housing without the benefit of adjusting the
  credit on inputs used during construction.
• The Central Board of Indirect Taxes and Customs
  (CBIC) has issued a notification giving real
  estate companies a one-time option to choose
  either of the tax rates.

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Impact of new GST rates on the real estate
fraternity

• Choosing between the old and the new GST rates,
  will be a business call that each developer will
  have to make, as per their assessment of market
  and liquidity conditions.
• The withdrawal of the ITC is expected to
  marginally bring down developers turnover, as it
  may be difficult for them to absorb the rising
  costs of construction.
• Real estate  firms have time till May 10 to
  communicate to their respective jurisdictional
  officers whether they want to continue with the
  old GST rates with input tax credit, failing
  which they will be deemed to have migrated to new
  tax rates.

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Over 50 builders face probe for profiteering
under GST

• Before GST was introduced in July 2017, various
  taxes levied by central and state governments on
  under-construction property added up to 5.5-6.5.
  Under GST, real estate was placed under the 12
  tax slab. Many builders duly raised prices, even
  though they could now claim input tax credit
  against products and services on which they had
  already paid tax.
• In the pre-GST era, there was no input tax credit
  facility on construction materials like cement
  and steel, which was there in the GST regime
  (till March-end). This called for a price cut,
  not a price increase,"the person cited earlier
  said on condition of anonymity.

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What will developers choose?

• For the projects launched before April 1, 2019,
  the GST Council allows the developers to stick
  with the old GST rates, with ITC benefit. So,
  the developers are likely to go with the old GST
  rate for those projects, as they have already
  factored the sale price keeping in mind the GST
  and in many cases the benefit of ITC was passed
  on to the buyers, says MD of Sikka Group.
• With the input tax credit being taken away, there
  will be an immediate cost implication for
  developers. However, it is up to the developers
  to decide if they want to clear their existing
  inventory by adopting the reduced rate regime, or
  stick to the previous arrangement should their
  profit margins be tighter and if they are
  confident of clearing the inventory at higher GST
  rates to the end-user.

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Reduced GST rate for real estate Impact on
property prices
When the rate of tax decreases, the value of a
product or service should also perceive a
corresponding reduction. However, the structure
of GST is such that in some cases, particularly
where the ITC cannot be claimed, the prices may
not decrease. This implies that the planned
decrease in GST rates for under-construction
housing projects, may not result in lower values
of residential units. It may also raise the level
of complexity for developers.
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GST registration Online in Chennai
Now it is mandatory for every company to file GST
and if any fails to do so, the government of
India would take necessary action. How about GST
registration online? Though its a tedious task
Never get cheated in this name. Visit
Kanakkupillai to find the easiest method for GST
registration online. Ask any successful
businessman about GST filing in Chennai, they
would always whisper the single brand,
Kanakkupillai. The citys leading Best  GST
Registration services are provided by
Kanakkupillai at an affordable cost.
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Contact US
CHENNAI OFFICE No 13/22 2nd floor, Yatra, TNGO
Colony, West Karikalan street, Adambakkam,
Chennai 88 Phone [phone] Email
support_at_kanakkupillai.com https//www.kanakkupill
ai.com/
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