Builders get GST notices to reverse input tax credit
Ahmedabad: The GST department has issued notices to hundreds of builders asking them to reverse their input tax credit (ITC).
The notices were issued for the years 2017-18 and 2018-19.
The department has asked builders to reverse the ITC for the unsold apartments at the time of procuring Building Use (BU) permission. Since the developers had not paid the GST for the units sold after being given BU permissions, the department has asked them to not claim the ITC also for such apartments.
The option of GST at the old rates of 8% and/or 12% (with ITC) was available only for the projects that were ongoing as of March 31, 2019. Any project that has commenced after April 1, 2019, is mandatorily required to follow the GST rate structure of 1% or 5% (without input tax credit).
However, as per the law, GST is not applicable on the sale of units after they get BU permission. The department has found some cases where developers have claimed full ITC while they were eligible for lower ITC.
In such a scenario, the department has issued notices asking developers to reverse ITC with interest and penalties. He added that developers were not aware of the ITC rules and that if a developer has received such a notice, he should reverse the ITC with interest and penalty.
