The Chief Commissioner of Central Tax and Customs last day clarified the issues on Input tax credit to Builders under the new Goods and Services Tax (GST) regime.
The Department, last week had said that under GST, full input tax credit would be available for offsetting the GST rate of 12%. As a result, the input taxes embedded in the flat will not (and should not) form a part of the cost of the flat.
Following this, confusions had been raised among the stakeholders regarding quantum of input tax credit.
In this regard, the department, on Tuesday clarified that “the input tax credit amount mentioned in the Press Note was only indicative. If proportion of land price in the total cost of the flat is high, to the extent of 50% of the flat price, as in metro cities and other prime localities, the tax paid on inputs will be around 4% to 5% of the flat price, i.e., Rs. 1.2 lakhs to 1.5 lakhs for a flat costing Rs. 30 lakh.”
It further clarified that in other cases, where the land cost is less, the proportion of input tax credit in the total cost of the flat will be high.
Subscribe Taxscan Premium to view the Judgment
