Reportedly, the new anti-profiteering body, the watchdog for allegedly denying consumers the benefit of reduced tax burden under the new indirect tax regime, may investigate against the Builders who are not passing on the benefit of lower tax under the GST to the flat buyers.
Sources confirmed that the standing committee of officials attached to the recently set up National Anti-profiteering Authority (NAA) has received several complaints against the real estate developers and may initiate proceedings against such persons if there is a prima facie case.
The NAA, chaired by senior bureaucrat BN Sharma, will direct the Director General of Safeguards (DGS), an investigating body within the Central Board of Excise and Customs (CBEC), to probe the issue, reports said.
Earlier, under construction properties were charged with Service Tax and VAT.
Under GST, while under-construction houses attract a 12% tax with input tax credit, the quantum of tax rebates available to the developer on the final product is substantial as the tax already paid on raw materials like cement and steel is substantial at 18%.
“Ideally builders should reduce the equated monthly instalment (EMI) to be paid by consumers. However, some developers are claiming higher input costs and change in business strategy to increase (the tax exclusive) price correspondingly. If they are increasing the price, they have to give justification, which has to pass the test of reasonableness,” a person from the department said.
