Builders and home buyers are trying to understand the best deal for them under the new Goods and Services Tax (GST) rates for ongoing projects and it seems to be turning into a double-edged sword for some.
Real estate developers have time until May 10 to decide on whether to stick to the old 12 (residential) or 8 per cent (affordable housing) rate with input tax credit or the new 5 per cent (residential) and one per cent (affordable housing) rate with no credits.
However, the choice between the two rates for ongoing real estate projects is not proving to be an easy one with concerns over how the over-used credit will be calculated and adjusted in case the new rate is taken and the customer reaction if the builder chooses to stay with the old rate and there is no reduction in the prices.
Some builders are also unsure whether revised agreements and prices can be submitted for registration under the Real Estate Regulatory Authority. “It's not an easy decision for the builder to decide whether to stay with the old scheme or opt for the new scheme for ongoing projects. If they continue with the old scheme, then managing the customer sentiment would be a challenge. In the new scheme, the mechanism for recovery of input tax credit from the customer needs to be well thought
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