Venkaiah Naidu writes to CMs flagging homebuyers' tax concern post GST

NEW DELHI: Union Housing Minister M Venkaiah Naidu has asked the chief ministers of all states to ensure that builders do not charge higher tax from homebuyers on instalments to be paid after the Goods and Service Tax ( GST) comes into effect from July 1.

In a letter to the chief ministers yesterday, Naidu said there had been complaints that the buyers, who had booked flats and had made part payments, were being asked to make entire payment before July 1 to avoid higher tax.

"...these activities are against the GST law. The Department of Revenue has clarified that construction of flats, complexes, buildings, etc. will have comparatively a lower incidence of GST if we compare it to a plethora of central and state indirect taxes under the existing tax regime," the minister said.

Naidu said it was expected that the builders would pass on the benefits of lower tax burden after the GST implementation to the buyers in the form of reduced prices/instalments.

"I would like to request your state government as well as the builders' associations to ensure that no builder/ construction company should ask customers to pay higher tax rate on instalments to be received after imposition of the GST," Naidu wrote.