December 13, 2017

 

Keeping a close tab on prices five months after the rollout of the Goods and Services Tax (GST), the Centre has warned builders against arbitrary price hikes on under-construction flats, saying it will be considered “profiteering”.

Acting on complaints that people who had booked flats before July 1 — when GST was rolled out — are being charged higher tax on EMIs, the Central Board of Excise and Customs (CBEC) has said construction of flats ought to be cheaper under the new tax regime. Pointing out that full input credit available under GST would offset the 12 per cent tax, the CBEC has said the input taxes embedded in the flat will not and should not form a part of the cost of the flat.

“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,” it has said.

The newly set up National Anti Profiteering Authority is empowered to not only penalise the erring company and order a refund of the additional amount, but also cancel its licence.

The real estate sector mostly seems to have already factored in the tax changes, and experts said there have not been any significant hikes in property prices post GST.

“As the land cost is significant, locations in the city centre are going to see lesser impact from GST. However, fringe locations will have a positive impact after GST,” said Ashutosh Limaye, National Director Research, JLL India.

Rajeev Talwar, Chairman, National Real Estate Development Council, agreed, saying: “Nobody can say that this is the price, now please pay GST. Since the traders have to show their accounts, they can’t add anything which can lead to an increase in the price of properties.”

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Source: thehindubusinessline.com