GST AND THE PROPERTY PRICE AFTER 1-7-2017


PROPERTY PRICE RISE AND GST AFTER 1-7-2017

Earlier-There was VAT and alternatively Composite Tax and Service Tax on the construction industry

NOW BOTH ROLLED INTO ONE-CALLED GST

Under GST the Service tax is 12%.

It has been learnt that customers willing to buy a nearly-completed house/flat will have to pay 12 per cent service tax on the entire amount, which is almost 7 percent higher than the previous rate of 4.5 percent. In addition, if customers are paying for their house in instalments, they too, will have to pay to 12 per cent service tax from July 1 onwards.

There is almost a 7.5 percent increase in such taxation after the GST regime comes into effect, as they will not be able to claim any credit for the taxes paid on inputs bought before July 1.

The invoice issued by the builder after July 1 will surely attract a GST rate of 12 per cent, forcing developers to write letters to clients briefing them about the situation.  It is also true that many builders have not issued VAT Bills to the home buyers and many have not issued Invoices for the buildings or apartments sold.

Many home buyers are not aware of taxation issues like, earlier VAT and Service Tax and Now both combined is GST, rolled into one.

More clarification is required to remove the confusion among the builders as well as the home buyers and if required few sections might be Amended.

RERA NOTIFICATION IN KARNATAKA AND THE IMPLEMENTATION OF GST AND ITS EFFECTS ON THE REALTY SECTOR IN KARNATAKA


The Government of Karnataka was deliberating and discussing the important issues and points of RERA, which had been notified by the Center and other states, but, will be notifying it soon without much MODIFICATION/CHANGE/ALTERATION.

This notification has very significant effect on the REAL ESTATE market and will bring about transparency and stability in the business.

The most important aspect of this Bill, that the ILLEGAL AND UNAUTHORISED CONSTRUCTIONS will be STOPPED.  Already, the fly by night builders and some VIOLATORS are out of business.  The deviation and violation might be controlled.

The under construction or incomplete projects might also come under this Bill.  The common man will definitely be benefitted by this bill to a great extent.

BUT, AS INDIANS, WE HAVE TO WAIT AND WATCH TO PLUG ANY LOOPHOLES IN THE BILL.

On the otherhand, the half baked and untested GST bill is also implemented from 01-07-2017 and there are various versions of its advantages and disadvantages of this BILL being deliberated and discussed across the country.

But, over all, the GST includes both service tax and the (earlier) VAT.  There is confusion over the benefits and its procedures in the minds of the builders, similarly, AS INDIANS, WE HAVE WAIT AND WATCH.

DO NOT JUMP INTO CONCLUSIONS AND TAKE ANY DECISION NOW.

WAIT FOR SOMETIME, FEW MONTHS TO KNOW THE AFTER EFFECTS OF THESE BILLS.

SERVICE TAX GOES UP BY 0.5% WITH THE ADDITIONAL LEVY OF KRISHI KALYAN CESS


Service Tax Rate to be 15% from 01.06.2016 with the addition of Krishi Kalyan Cess

Enabling provision for levy of “Krishi Kalyan Cess”:

Krishi Kalyan Cess is proposed to be levied with effect from 1st June, 2016 on any or all the taxable services at the rate of 0.5% on the value of such taxable services. Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of the proposed Cess on the service provided by a service provider.

Clause 158 of Finance Bill 2016

Krishi Kalyan Cess-  Clause 158 of the Bill seeks to insert new Chapter-VI so as to levy a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services for the purposes of the Union for financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.

Extract from Finance Bill 2016

  1. (1) This Chapter shall come into force on the 1st day of June, 2016. Krishi Kalyan Cess.

(2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services at the rate of 0.5 per cent. on the value of such services for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.

(3) The Krishi Kalyan Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.

(4) The proceeds of the Krishi Kalyan Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Krishi Kalyan Cess for such purposes specified in sub-section (2), as it may consider necessary.

(5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made there under, as the case may be.

 

PROPERTY GUIDANCE VALUE REVISED OR INCREASED IN BANGALORE URBAN AND RURAL DISTRICT WITH 15 DAYS NOTICE TO FILE OBJECTIONS


The State Government has increased the Guidance Value or the Circle Rates or the Market Price of the property in Bangalore Urban, Bangalore Rural District and Ramnagar District with 15 days notice to submit the objections, if any, with supporting documents or evidence.

In some areas, the increase is very steep and on an average the increase is around 10% only.  The consequent effect will be strain the buyers.  With this increase, the Income Tax, VAT, Service TAx and Capital Gains tax will also goes up, indirectly.

The Income Tax department is also scrutinising many transactions, wherein the buyers in collusion with the sellers/agents/builders have underquoted the property consideration below the guidance value.  The department may initiate penal action on such buyers and sellers soon. The Guidance Value is treated as the Fair Market Value.  The property value or consideration must not be less than the guidance value as per the Finance Act.

Service Tax – 14% will come into effect only from the date of notification


The Hon’ble President has given assent to the Finance Bill, 2015 on Thursday, May 14, 2015. Accordingly, the Finance Bill, 2015 now becomes Finance Act (No.20), 2015. However, it is to be noted here that increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education cess and Secondary & Higher Secondary Education cess) as was proposed in the Union Budget, 2015 will become effective only after the date to be notified and not effective from May 14, 2015.

Further pursuing with Mr. Narendra Modi’s Dream of Swachh Bharat, a new Chapter VI has been inserted in the Finance Bill, 2015 that contains a new levy of cess called the ‘Swachh Bharat Cess’ which may be levied on all or any of the taxable services at the rate of 2% of the value of such services. Hence, Service tax rate may increase from present 12.36% to 16% for specified services on which Swachh Bharat Cess is levied from a date notified later.

Therefore, it is to be noted that Higher rate of Service tax from 12.36% to 14% and Swachh Bharat Cess of 2% will become effective only from the date to be notified and not from May 14, 2015. Further, the changes in Negative List of services will also come into effect from the date notified later.

DID YOU CHECK AND VERIFY THE VAT TAX, SERVICE TAX, BESCOM DEPOSIT AND BWSSB DEPOSIT CHARGED BY THE SELLER/DEVELOPER ?


ONE OF OUR READER HAS DONE A CALCULATION OF VALUE ADDED TAX, SERVICE TAX, BESCOM DEPOSIT, BWSSB DEPOSIT, LEGAL CHARGES, GENERATOR CHARGES, STAMP DUTY AND REGISTRATION FEES, WHICH WORKS OUT AT OVER 20% OF THE STATED OR QUOTED PRICE OF THE PROPERTY, APART FROM THE CHARGES PAID OR PAYABLE FOR OBTAINING THE BANK LOAN, WHICH MAY BE ANOTHER 1/2% OR 1%.

IN SOME CASES, THESE CHARGES AMOUNTED TO OVER 25% AND 75% OF THE CASES, THE BUYERS DO NOT HAVE KATHA FROM BBMP, STILL HAVE TO REMIT THE BETTERMENT CHARGES AND PAY THE KATHA FEE, WHICH WORKS OUT AT APPROXIMATELY AT 1%.

Many of the buyers are under the wrong impression and notion that the approval or sanction of BANK LOAN will confer the best right, title and interest of the property.  IT IS WRONG. 

TAKE CARE. CHECK THE CHARGES. DEMAND THE BILLS. DEMAND THE RECEIPTS. 

FLAT/APARTMENT BUYERS/PURCHASERS – VAT AND SERVICE TAX PAID BY YOU HAS BEEN DEPOSITED WITH THE GOVT


THE HONEST AND GENUINE BUYERS OF APARTMENTS/FLATS WILL BE IN FOR ROYAL JOLT, IF THEY CHECK THE CREDENTIAL OF THE BUILDERS/DEVELOPERS REGARDING TAX COMPLIANCE.

MAJORITY ARE TAX EVADERS AND IF FOUND OUT, THEY WILL ELIMINATE THE OFFICER AS THEY DID TO LATE.D.K.RAVI.  IT IS THE LAND/BUILDERS MAFIA.

THEY MUST BE INVESTIGATED BY THE COMMERCIAL TAX DEPARTMENT, INCOME TAX DEPARTMENT, ENFORCEMENT DIRECTORATE, SERIOUS FRAUD INVESTIGATION OFFICE, BANGALORE METROPOLITAN TASK FORCE, COD AND THE CENTRAL BUREAU OF INVESTIGATION, JOINTLY AND ALL OF THEM WILL BE BEHIND BARS FOREVER FOR CHEATING, FRAUD, MISREPRESENTATION OF FACTS, TAX EVASION, FRAUDULENT MANIPULATION, FORCED OR COERCED PURCHASE OF LANDS FROM INNOCENTS.

IT IS SUSPECTED THAT BUILDERS (MAFIA) AND A SMUGGLER TURNED JEWELLER ALONG WITH A POWERFUL POLITICIAN BEHIND THE KILLING OF LATE.D.K.RAVI.