RAJAHMUNDRY: AP builders have demanded that the Centre should allow them to avail Composition Scheme with fixed GST of five per cent on flat and land cost. They vowed that they will not claim Input Tax Credit so that it helps bring down the cost of each housing project and also facilitates good relationship between builders and customers in the state.
Currently, as per GST norms, the builders are paying GST of 12 per cent on the total cost of a housing project including cost of flat and land and they are entitled to get back Input Tax Credit of about 4.5 per cent though the government claims that it is about 6.5 per cent. The Centre has introduced Composition Scheme under GST to help small and medium enterprises and startups. Tax compliance procedures have been simplified in this scheme as this category of entrepreneurs may not have requisite resources and expertise, the government feels.
The Composition Scheme helps tax payers to file their summarised returns on a quarterly basis unlike the present system of filing tax returns thrice in a month.
Businesses dealing with goods can only avail Composition Scheme and those dealing with services cannot do so except for restaurants. If a manufacturer of goods intends to avail Composition Scheme, he or she has to pay GST rate of two per cent including one per cent each of State GST and Central GST. Similarly, a food supplier has to pay GST rate of five per cent including 2.5 per cent each of SGST and CGST.
Those who opt for Composition Scheme are not entitled to avail Input Tax Credit.
Though there is no provision for service providers to avail Composition Scheme at present, as the GST Council has been holding a series of meetings to revise the GST to suit the needs of the people, the state builders associated with Confederation of Real Estate Developers’ Associations of India, are asking the Centre to allow them to opt for Composition Scheme by fixing GST of five per cent from the present 12 per cent on each housing project.
The authorities are saying that builders are paying 12 per cent GST and claiming for about 6.5 per cent Input Tax Credit, which means that they are in fact paying only 5.5 per cent of GST and even that they want to be reduced to only five per cent officially for each housing project. But if they avail Composition Scheme, they are not entitled to claim ITC, state the authorities.
The builders and customers are losing mutual trust as the customers are insisting on builders forwarding the benefit of ITC back to them by reducing the cost of housing projects. But the builders say that unless they complete the whole housing project, they cannot have an idea as to how much ITC they could get back and are perplexed about how to pass on its benefits to customers before the completion.
Credai AP chapter state vice president Buddiga Srinivas said, “Our proposal to allow construction sector to opt for Composition Scheme and fixation of GST of five per cent on each housing project with no claim for ITC, is the best remedy for the housing sector which is facing a series of issues following launch of GST.”
On the other hand, double taxation is affecting the construction industry as the builders are being forced to pay Value Added Tax of 1.25 per cent and also GST of 12 per cent for housing projects under construction as the concerned authorities are unable to interpret the GST order properly.
Private builder Bheem Sankar said, “Double taxation is the burning issue we are struggling with at present as we are being forced to pay VAT for under construction of housing projects and GST. We want the state government to address it and provide us relief.”
Tax payers fail to file returns due to technical glitches
GST payers are finding it a tough task to file their tax returns as per schedule following technical glitches in the maintenance of servers in the state. Ever since the GST came into force from July 1, tax payers have been asked to file their tax returns thrice in a month depending upon the nature of trade and volume of business. Initially, the officials excused themselves claiming teething problems. But even though more than three months have passed, there is no relief to those who intend to file their returns.
Recently, the government had fixed October 5 as the extended deadline for those who have to file their returns for the month of August but even that has also failed as tax payers have failed to file their returns due to technical snags. Now, the government has removed the deadline.
The GST payers have to pay returns thrice in a month in the forms of GST R1, GST R2 and GST R 3B. For instance, under GST R1 pertaining to construction industry, sale of flats by builders, sale of hardware materials to builders by hardware dealers will be filed. Under GST R 2, details of sales and purchases by various dealers will be accessible and both the sellers and purchasers have to get their bills tallied. If any discrepancies are found under GST R3B, total liability and input tax credit will be lodged and the builder has to pay remaining amount as GST.
Builders say that they are getting perplexed over complex procedure in filing their returns and also getting preoccupied with such work that involves too much technicalities instead of concentrating on the execution of their housing projects.
