CBEC warns builders to refrain from hoodwinking customers as this is against the GST legislation.
In the wake of reports that builders are forcing customers to pay the entire cost of the flat before July 1 or face higher tax, the Central Board of Excise and Customs (CBEC) has warned builders to refrain from hoodwinking customers as this is against the GST legislation.
“The CBEC and States have received several complaints that in view of the works contract service tax rate under GST at 12 per cent in respect of under construction flats, complex, etc, the people who have booked flats and made part payment are being asked to make entire payment before 1 July 2017 or to face higher tax incidence for payment made after 1 July 2017. This is against the GST law,” the CBEC statement said.
“Construction of flats, complex, buildings will have a lower incidence of GST as compared to a plethora of central and state indirect taxes suffered by them under the existing regime,” it added.
A Finance Ministry statement said: "Despite this clarity, if any builder resorts to such practice, the same can be deemed to be profiteering under Section 171 of the GST law."
It is pertinent to note here that the GST Council has already finalised tax rates on almost all goods and services in the bracket of 5, 12, 18 and 28 per cent.
Source: Media Reports