The GST Council Thursday extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates.
The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.
For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 10.
"The date for exercising the option for residential real estate project to either stay at old GST rate (8 per cent or 12 per cent with ITC) or to avail new GST rate (1 per cent or 5 per cent without ITC) is being extended to May 20, 2019 from May 10, 2019," the GST Council said in a tweet.
The Central Board of Indirect Taxes and Customs (CBIC) has given the real estate companies a one-time option to choose either of the tax rates and once a realty developer chooses a particular tax rate for ongoing projects he would not be able to modify it.
In case, realtors do not exercise the option by May 20, they will be covered under the lower tax rate of 5 per cent and 1 per cent with effect from April 1, 2019, and will not be entitled to avail tax credit on inputs.
AMRG & Associates Partner Rajat Mohan said builders are still under the process of calculating the cost benefit analysis in relation to tax change scenario.
"Builders were facing challenges in finalising the roll over scheme to the new tax regime and in the light of new circular on this matter, government in good faith has increased the date for opting," he added.