New Delhi Real estate companies that opt for low rate of Goods and Services Tax (GST) payment, which has not been able to purchase 80 per cent of the total supply from registered dealers, will have to pay GST on the difference of purchase by 30 June. From April 1, 2019, the GST Council gave an option to real estate companies to pay GST at the rate of five per cent for housing units and one per cent for affordable housing, which do not want to avail input tax credit (ITC).
Council had said that it would be compulsory for companies opting for this option to purchase at least 80 per cent input from registered dealers. GST will be paid on the shortfall in this purchase. For this, GST will have to be paid at the rate of 18 per cent for supplies used by real estate developers as inputs or input services and 28 per cent for cement.
The Revenue Department had issued a directive in this regard to the Principal Chief Commissioners of Central Taxes on 24 June. It stated that in the event of purchase below 80% fixed limit, the promoter or developer will have to pay tax on the value of the input.
The payment is to be made electronically on the portal by the end of the quarter following the financial year through a prescribed form. On this basis, the payment for the financial year 2019-20 will be till June 30, 2020. Rajat Mohan, Senior Partner, AMRG & Associates said that real estate developers are under a lot of pressure in the current situation. The sector is hoping to extend this liability deadline.