Builders hoodwinking buyers in city
Real estate developers in Visakhapatnam, and probably elsewhere around Andhra Pradesh, are indulging in what could be outright deceit in relation to the Goods and Services Tax (GST).
Real estate transactions attract a GST of 12%. The GST has to be paid on the entire cost of the apartment, including the pro-rata cost of land. For example, if a 1,000-sq foot of apartment costs Rs 30 lakh, the apartment buyer is required to pay Rs 3.60 lakh as GST, according to industry sources, unlike under the earlier tax regime when VAT was paid on the cost of constructing the apartment.
“Now, each apartment buyer has to pay the 12% GST on the cost of land and cost of construction,” says DRK Raju, managing director of Aruna Constructions, a residential real-estate developer in Visakhapatnam.
“Developers pay taxes on the inputs they use in the construction of an apartment block like cement, iron and sand. They then reclaim the input taxes. The correct thing to do when they get the money back is to give it back to the buyers, but few developers do that. They are simply pocketing the refund,” says Raju.