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Unused ITC for half-built houses to be reversed
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SME Times News Bureau | 14 Mar, 2019
The unused Input Tax Credit (ITC) on goods and services lying with the
property developers as on March 31 will be reversed for
under-construction properties since the ITC stands to lapse from April 1
for such houses.
"This (unused ITC lying in the ledger of the
developers) has to be reversed as ITC benefits available to them will
lapse from April 1 and can not be passed on to the buyers," said a
source, adding this is the suggestion from the GST Fitment and Law panel
which is currently making the rules.
"From April 1 new rates
will apply without ITC where 5 per cent will be charged for and 1 per
cent will be the rate for affordable housing," said the source.
The
reverse would take place through the monthly return file by GSTR3B.
GSTR-3B is a monthly return required to be filed by all regular
taxpayers till March 2019.
Last month, GST on under-construction
housing properties was cut to 5 per cent and for affordable houses to 1
per cent. In both the cases, builders will not be able to claim ITC.
Properties
where the construction has been completed attract stamp duty, not GST.
The GST Council has decided to lower the GST rate on under-construction
houses to 5 per cent against 12 per cent and on affordable homes to 1
per cent against 8 per cent to boost housing.
A member of the
Central Board of Indirect Taxes and Customs said government is mulling
two-three models for calculating the same.
Bimal Jain, chairman
of Phdcci Indirect Tax committee, opposed the move for reversal of
credit saying real benefit of GST will accrue only when the impact of
higher rates on raw material such as cement, steel and the like is
neutralized.
At the same time, he said, ITC as on April 1, 2019
should not be allowed to lapse and return credit be allowed for
utilization with other tax liabilities.
Industry sources said
while the ITC should not be returned for unused credit, government can
not demand used credit before April 1 for under-construction houses (but
not sold) as then it would amount to a decision being forced
retrospectively. Legally, all decisions are applied prospectively.
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