Goods and Services Tax

Yet another round of complications coming for developers (CA. Keshav R Garg, Partner, K D & Associates, Chandigarh) Yesterday GST Council approved lower rate of tax for housing, some of the buyer might cheer for a while but for builder community there seems more troubles in near future. The reduction in rates for under construction houses has come with a clause that the developer shall not be allowed Input Tax Credit on his purchases. This not only invite mammoth calculations but also higher level of compliance complexity for them. At the very outset the unsold stock which the builders would be carrying as on 31 st March 2019 would become huge trouble. The input tax credit which has already been used against these unsold stock invites the reversal of the said credit resulting into payment of liability in cash. The government assumes that the corresponding credit would be lying in builders credit ledger against unsold stock. But that’s not the reality. Most of the ...

Reduction in rates of GST on houses: How it impacts you (Keshav R Garg – Partner, K D & Associates) In recent GST Council meeting lower GST Rates for Housing has been approved. As per the new rates effective from 1 st April 2019, an affordable house would be charged at 1% GST and others at 5%. Further it has been announced that builders shall not be allowed to claim input tax credit in respect of their purchases. It must be informed that GST is charged on under construction houses who are yet to get completion certificate from competent authority. As being portrayed by the government, is reduction in GST rates something really to cheer about. Let us understand in this article. At present Affordable housing was charged 8% whereas 12% GST was charged on other houses. But the builder were earlier allowed to claim input tax credit. Input tax credit is the benefit of tax which builders pays on the material he purchases for constructing the house. Where such benefit...

GST Registration in case of Renting of Immovable properties: By CA. Keshav R Garg 1.      Let us first understand that the place of registration is decided by the term place of business as defined by section 2(85) of the CGST Act 2017. As per the definition of “Place of Business” it is a place from where the business is carried on and/or where a warehouse or any other place for storage of goods is located and/or books of accounts are maintained and/or the business through agent is carried on. It nowhere considers “place of supply” for determining the Place of business for the purpose of GST Registration. Hence, place of supply has no impact as far as GST Registration is concerned. 2.      As per section 22 of the CGST Act 2017, a person is liable to take registration from the place he makes a taxable supply. There is a distinction in place of supply and place from one makes taxable supplies. Place of supply is derived to conclud...

*Yet other headline budget but to disappointment* As in past this budget is announced to make newspaper headlines. The budget doesn’t seem to give actual benefits. 1.     No outright tax exemption up to 5 lakhs but instead rebate has been increased from Rs. 2,500 to Rs. 12,500. This means that person having total income exceeding 5 lacs would not get any relief. His tax slab would remain at 2.50 lakhs only. 2.     Other announcement which the government made on increase in tax exemption on bank interest, upon analyzing the finance bill, it has come to light that this limit increase from Rs. 10,000 to Rs. 40,000 is only for purposes of tax deduction by bank. The interest in excess of Rs. 10,000 continues to remain taxed. 3.     Also tax on notional rent has now been exempted in respect on two self-occupied houses but the benefit of interest on loans on these two houses collectively has be...

There has been a regular comparison between the completed project and under-construction projects. In the latter GST is charged whereas in the former it is not. Fully ready to move in houses are neither covered under the term “goods” nor “services” for levy of GST. The very mindset that under construction houses are built as per the specification of the consumer and ready to move in are not, needs to be changed. In today’s world where thousands and thousands of units are constructed in a project there arises no question of specification from customer. Levying a small percentage of GST on both under-construction and built in residential units would be great idea, exempting a few affordable housing projects. This will not only increase the revenue but also not pinch hard to the customers, also improving liquidity crunch faced by builders. We all know that since GST has been enforced, we have preferred built in units instead of under construction ones for obvious reasons. Th...

Short Term Memory   GST Loss – CA. Keshav R Garg At new year eve when world was busy celebrating, the GST department was serving its own feast. They released over 50 documents in total as a new year gift for the consultants, taxpayers and other stakeholders. These 50 documents include 35 notifications, 12 circulars and 3 orders. These in total make a literature of around 125-150 pages on which the minds of the professionals have started running. But one thing is certain that level of confusion and anxiety it creates for the outside world, the same level of confusion and anxiety persists within the GST department. It is meant to be so, after all it is an election year. With Next GST council meeting round the corner, the authorities might have to refill the ink to sign the forthcoming documents. This gamut of notification and circulars not only create confusion but might cause Short Term Memory oops GST Loss for many. Human RAM looks like choking continuously pushing us to c...