The Central Board of Excise and Customs (CBEC) has sent out a warning to builders to not deceive customers by claiming that the levy of 12% GST is applicable on the original cost of the building rather than on the builders.
CBEC reported that it was receiving reports of builders strong arming customers into either paying the entire cost of the flat before July 1 at the present tax rate of 5.5 per cent or payment of 12 per cent tax on any payments made post July 1 (the expected date of GST roll-out). CBEC said this practice is against GST legislation.
A statement released by CBEC shed further light on the matter, “The CBEC and States have received several complaints that in view of the works contract service tax rate under GST at 12% 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 July 1, 2017 or to face higher tax incidence for payment made after July 1, 2017. This is against the GST law.”