An approach to enable right decision on your ongoing projects in real estate
Today is the last day( 20th May 2019) to make up your mind whether to opt for old rates on ongoing projects or not, many of us aren’t still clear as to what factors to be considered and how will you approach the decision making is covered under this article.
What is an ongoing project?
Projects that meets following conditions
- Commencement certificate issued before 1st April 2019
- Where commencement certificate not required to be issued, construction of project should have started before 1st April 2019. Earthwork for site preparation and excavation for foundation would represents that construction is started
- Completion certificate is not issued before 1st April 2019
- Apartments being constructed under the project, wholly or partly booked on or before 31st March 2019.
In the lens of Builder/Developer
Impact of opting for old rates- 12% or 8% GST
- Will you be able to collect additional GST from customers compare to new scheme where corresponding applicable GST are 5% or 1% for non-affordable and affordable houses respectively.
- How will you Compete with other developers who have opted to pay under new scheme?
- No Tax is payable on reverse charge mechanism for the shortfall 80% of purchases from registered persons
Impact of opting for new rates- 5% or 1%
- ITC to be reversed on units unsold and installments due on units sold as of 1st April 2019
- The above will be a cost in the hands of developer wont be able to collects from customers
- Developer under RERA wont be able to revise the price in view of restrictions laid therein
If you follow the steps indicated above, you will be able to compare whether its making sense to continue with old rates or not on your ongoing projects.
As time is very limited and not taking a decision will automatically make all the ongoing projects move to the new concessional tax rate, it is very important for all the promoters/land developers to quickly act and take a decision in this respect.
with 100 FAQs both in Tamil and English, GST handbook on Real Estate is available for delivery, you may book your copy at https://tngstp.com/shop/