Sgst Dept Asks Real Estate Developers To Explain Expenses, Real Estate News, ET RealEstate
AHMEDABAD: The State GST department has issued notices to several real estate developers asking them to explain their expenses.
According to GST officials, around 20,000 notices have been issued to various taxpayers in across sectors, mainly for the 2017-18 financial year, some of whom are realtors.
Sources said that residential real estate had 12% GST regime in that year with the option to obtain Input Tax Credit (ITC) and as the system to check suppliers’ GST compliance was not in place, developers are staring at high tax now.
On the condition of anonymity, a top official in the State GST department said, “The time limit to issue notices for the 2017-18 financial year was ending so we have issued around 20,000 notices in Gujarat to taxpayers whose returns were under scanner.”
“We have issued a number of notices to builders as well for 2017-18 and also for 2018-19 under Section 73 of the GST Act. We found that many developers had taken fake invoices from suppliers to show higher expenses. We have a system to identify such purchases.”
“We have asked developers to either explain the purchases or pay tax,” the officer added.
CA Karim Lakhani said, “Initially GST was 12% for residential real estate and developers were able to pass on ITC to buyers. However, the central government in 2019 changed GST rates to 1% for affordable and 5% for other residential units. Many ongoing projects at the time were given an option to choose between the old and new systems.
