Home buyers to pay 12% GST on balance due if completion certificate issued by March 31
Home buyers will have to pay 12 percent GST on balance amount due to the builder if the housing project has been granted completion certificate by March 31, 2019, the CBIC has said. Builders who have received a completion certificate for an ongoing project before April 1, 2019, will have to charge 12 percent GST from buyers on the balance amount due towards the purchase of the flat. Issuing the second set of FAQs for real estate sector, the Central Board of Indirect Taxes and Customs (CBIC) said that builders will not be able to adjust the accumulated credits in ongoing projects in case they opt for lower new GST rate of 5 percent for normal and 1 percent for affordable housing.
The first set of FAQs for real estate sector was issued last week to clarify doubts with regard to migration of real estate developers to new GST rates for the sector which has come into force from April 1, 2019. The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019. For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 20.
Estate Planning: Transferring inherited property
The beneficiary needs to ensure that the property records are mutated to clearly establish ownership. When an individual inherits assets, either through Will or under personal laws, he needs to complete a few legal formalities to become the rightful owner. While the procedure to transfer movable assets in the beneficiary’s name is simpler, it can be tricky when it comes to immovable assets. In the case of jewelry, cash or stocks, the beneficiary only needs to transfer them in his name. When it comes to real estate, the beneficiary not only needs to transfer the asset but also mutate records in the concerned government department or revenue records.
Tedious procedure: It’s best to hire a lawyer to assert your claim on the assets and to comply with the formalities. However, knowing the procedure will help in arranging documents and will expedite the process, if required. For this, you would need to apply for a Probate of the Will, a Letter of Administration or a Succession Certificate from the court. You may also need to take physical control of the inherited assets to protect them while carrying out the transfer. There is also a possibility that the deceased who wishes to pass on his property may have appointed someone as a nominee for some of the assets, which may include movable as well as immovable. But a nominee is a mere trustee until he is successfully able to establish a beneficiary’s claim and pass on the assets. To avoid any problems, the asset owner should appoint someone close as a nominee. The best practice is to declare the nominee as the beneficiary under the Will.
Realty pins hopes on new Govt to end liquidity crunch
The momentum of reforms in the real estate sector, which remained under the spotlight over the past five years for various policy and regulatory measures, is expected to gather pace. The sector is now seeking the government’s attention mainly to resolve the liquidity crunch, which is stifling growth, and also to help complete stalled and delayed projects, the biggest concern for the sector. A series of reforms, including the implementation of Real Estate (Regulation & Development) Act, 2016, the Goods & Services Act, amendment to Benami Transaction (Prohibition) Act, the Insolvency & Bankruptcy Code and the decision to demonetize high-value currency notes have certainly been helping to formalize this sector. However, these steps also disrupted sales momentum in the short term causing liquidity pressure for realty developers. The liquidity crisis had been growing for a while now, and the IL&FS and NBFC crisis in the second half of 2018 further added to the stress, which, in turn, has led to the challenge of delayed projects across the country.
Builders opting for old GST rate face problems
Builders are facing a piquant situation with homebuyers insisting that they will pay only the new rate of 5 percent GST on flats even though the developer has opted for the old rate of 12% to take advantage of credit on inputs like paints, cement, and steel. As part of the rationalization of the GST on real estate sector, the GST Council had allowed builders to migrate to 5 percent rate for residential units and 1% for affordable housing without the benefit of the input tax credit from April 1, 2019.
What’s your housing need?
Having a home in the hub of the city with fully equipped infrastructure to boast of is what every home buyer aspires for. In a city like Mumbai, it is easier to do so. But when you are looking for a home beyond the city limits, you have to take a close look at not just the basic amenities and markets that fulfill your daily requirement, but much more than that. While projects in prime locations may seem alluring, buyers should also consider the future prospects of the project and the infrastructure developments in the location.
Residential versus Commercial: It is important to gauge, if the location that you are considering, will be developed as a residential or commercial area. A fully residential area with a fair mix of commercial centers offers good living conditions. However, a residential property in a fully commercial area may not be a wise choice in the long run. ‘Green’ quotient: Buyers can check if the property is equipped to conserve energy and has enough natural light, as such provisions will help to save power and money in the long run. You should also check the areas surrounding the property) for the amount of greenery it will offer, as it will have a direct bearing on air pollution and the lifestyle in the future. Proximity to a highway or an infrastructure project: While proximity to an upcoming highway can boost the property’s price, there can be other associated problems. Regular pollution from the busy highway can cause health problems.
Source: Mid-Day, Friday 31 May 2019
Connect with one of our experts. We look forward to helping you with your real estate needs.