GST ON SALE OF COMPLEX, BLDG.

Effective tax rate on complex, building, flat etc. It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready to move-in flats where sale takes place after issue of completion certificate by the competent authority. GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale. 2. Effective rate of tax and credit available to the builders for payment of tax are summarized in the table for pre-GST and GST regime.

Period	Output Tax Rate	Input Tax Credit details		Effective Rate of Tax
Pre- GST	Service Tax : 4.5% VAT : 1% to 5% (composition scheme)	Central Excise on most of the construction materials : 12.5% VAT : 12.5 to 14.5% Entry Tax : Yes	No input tax credit (ITC) of VAT and Central Excise duty paid on inputs was available to the builder for payment of output tax, hence it got embedded in the value of properties. Considering that goods constitute approximately 45% of the value, embedded ITC was approximately 10- 12%.	Effective pre- GST tax incidence : 15- 18%
GST	Affordable housing segment : 8%, Other segment : 12% after 1/3rd abatement of value of land	Major construction materials, capital goods and input services used for construction of flats, houses, etc. attract GST of 18% or more.	ITC available and weighted average of ITC incidence is approximately 8 to10%.	Effective GST incidence, for affordable segment and for other segment has not increased as compared to pre- GST regime.

3. Housing projects in the affordable segment such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Government etc., attract GST of 8%. For such projects, after offsetting input tax credit, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST. 4. For projects other than affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to implementation of GST. Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down. Press Release, dated 8th December, 2018

DUE DATE FOR ANNUAL RETURN

वार्षिक रिटर्न

GSTP EXAMINATION

MIS-MATCH LOSS OF CREDIT

The entire movement towards GST was with an underlying assumption that in GST there will not be any tax cascading and credit will flow seamlessly. It is pertinent to note that input tax credit (ITC) is heart of GST regime.  GSTR-3B for the month of September 2018 appears to be the return which will effectively finalise/freeze most critical details, including input tax credit, of FY 2017-18.

Law - Section 16 of CGST Act, inter-alia, states that the buyer can claim ITC provided the vendor deposits GST as well as files GST return under section 39 (one can contend that return referred in section 16 is GSTR-3 - which is yet to be made operational yet and not GSTR-3B!). Effectively, through this provision, the GST payer is burdened with the responsibility of ensuring that all their vendors pay GST and file returns. Casting such onerous condition on GST payer (and for that matter on every GST payer) leads to un-manageable burden.

GSTN glitches - Earlier, to ensure the ITC to GST payer, the GSTN had created a work-flow which involved filing of GSTR-1, GSTR-2 and GSTR-3. However, given initial portal glitches, the Government made available to the business GSTR-1 and GSTR-3B. It may be noted that the dismantling of the detailed process took away the right of the GST payer to view, on continuous basis, and take credit basis uploaded GST invoices.

Challenges from vendor side - At present, the ITC is availed by the GST payer on self-assessment basis in the GSTR-3B. However, although, filing of GSTR-2 is kept in abeyance, still there is requirement to reconcile GSTR-3B with auto populated GSTR-2A for nine months (from July 2017 to March 2018). Additionally, while the due date for filing GSTR-1 has been extended upto 31st October 2018, its incorrect to expect credit finalisation till 20th October 2018. GST payer is able to view/download the GSTR-2A in Excel only recently, from mid-August 2018 (earlier it was only viewing facility - which was of no use to large taxpayers). Further, the details were downloadable in monthly format whereas the credit was appearing in subsequent months.

How GST payer is penalised without his fault? - The reconciliation between GSTR-3B and GSTR-2A reveals three aspects: 1.  Vendor has not filed GSTR-1 2.  Vendor has filed GSTR-1 and credit is appearing in the buyers GSTR-2A but vendor has not deposited GST 3. Vendor has filed GSTR-1 and due to technical glitches, credit is not appearing in the buyers GSTR-2A As regards, sr. no. 1 above, its pertinent to note that except follow-up with the vendor, the GST payer is not able to proceed further. Real challenges are faced by GST payers in case of one-time vendors (as it is difficult to trace the missing vendors). The GST law does not enable the buyer to issue notices/summons to recover the GST un-paid by vendor and thus denies natural justice. As regards, sr. no. 2 aforesaid, how the buyer understand whether the vendor has deposited GST or not (in the downloaded file). As regards, sr. no. 3, how can buyer be expected to resolve the GSTN technical glitches. Also, the entire mechanism of denial would have worked if the envisaged system of ITC matching (Form GSTR-2 and GSTR-3) was made operational and now making it applicable retrospectively for FY 2017 - 18 is unjust. Further, neither the GST Authorities made the GST Compliance Rating (refer section 149 of CGST Act) of the vendors available to enable the buyer to make informed decision about vendors. Also, even at present there is no mechanism provided to intimate the GST Authorities regarding GST non-payers or non-filers or missing invoices. Additionally, the GST Authorities are yet to initiate actions against non-compliant vendors or de-register them.

What the GST payer should do? - In case GST payer intends to claim ITC, even though its not appearing in the GSTR-2A, then to mitigate the allegation of suppression, GST payer should submit a letter (reproducing the aforesaid analysis, list of claimed credit, list of missing credit etc) with the jurisdictional CGST/ SGST Authorities and email the same to GSTN.

What the GST Authorities should do? - On 18th October a Press Release was issued states that '… last date for availing ITC in relation …July, 2017 to March, 2018 is ... 20th October, 2018'. It also further states that 'The apprehension that ITC can be availed only on the basis of reconciliation between FORM GSTR-2A and FORM GSTR-3B conducted before the due date for filing of return in FORM GSTR-3B for the month of September, 2018 is unfounded as the same exercise can be done thereafter also.' That means the Authorities wants the GST payer to avail credit now and reconcile late. This may well mean subsequent reversal with interest even though the GSTN was unable to provide matching/ mis-matching for FY 17-18 even upto August 2018. The extension of GSTR-3B upto 25th October 2018 will help non-filers and filers will suffer as GSTR-3B cannot be modified. Now, after 15 months in GST regime, the GST payer expects the Authorities to anticipate the challenges than resorting every time on quick-fixes. As all the returns as well as e-way bills are filed online, enabling the GST Authorities to track non-payers/non-filers, appropriate proceedings should be initiated against the vendors than penalizing the bonafide buyers.