New Delhi: The Goods and Services Tax (GST) might be giving more relief to the home buyers with the Authority on Advance Ruling (AAR) in West Bengal concluding that services such as preferential location and facilities like car parking in apartments should be treated as “composite construction service” and attract the same levy as construction.
Builders now have to charge 5% GST on services packaged with affordable homes and 8% on others. Several builders, including some of the top players were charging 18% GST on these services, while the government had lowered the rate for under construction apartments. The government allows one-third rebate on the value of land that result in the actual levy coming to 8% for non-affordable category residential units when the GST rate is 12%.
As per Harpreet Singh, partner at consulting firm KPMG, “Taxability of ancillary charges recovered by builders like preferential location charges (PLC), parking charges, transfer fees, external development charges, internal development charges (IDC), document charges etc has been a matter of dispute even under the erstwhile service tax regime. With this ruling, it is likely that diverse practices adopted by builders on taxability of PLC and parking charges end, and such services henceforth are made liable to tax at the lower rate as applicable to construction services .”