Why GST council giving builders an option

To choose between whether to charge GST rate of 12% and claim ITC for Apr 1 2018 to Mar 31 2019 versus mandatorily having to use 5% rate which is way forward.

What will happen is most of the builders will charge the high rate to home buyer but will not give ITC benefit.

So whats happening is Govt not trusting these builders like restaurant owners to pass gst benefits to consumers. So why give them the option for even 1 year. more  

View all 11 comments Below 11 comments
This should have not been done. However, keeping in view that the said period has already elapsed, the concerned authority should now ask the builders to submit details of such GST recovered from the buyers, benefit of ITC passed on to the customers and the amounts paid to the government. Stern action should be taken against the defaulters. more  
It is for avoiding legal hurdles as well as to avoid applying law from pre change. Unlike hotel business construction of housing project is long process. So to give equitable opportunity to all concerned stockholders the option is given. And has to abide by the option. The Home buyer can not claim ITC as he is the consumer. It is a fair implementation of the law. more  
Housing sector is now a prime sector, which is being encouraged by government, as it gives lots of employment to cross section of the society. The GST should be reduced or removed. more  
The restaurant ITC is difficult to calculate.
This does not mean the restaurants are not cheating, they do cheat and on a massive scale.
A restaurant typically prepares upwards of 50 snacks, if it also serves meals the preparations are more than 100. And the same ingredients are used in multiple cuisines
Let us consider simple case of MASALA DOSA. Here you have ingredients with GST rates of 0% to 28%, later being dry fruits. Typically there are about 8 ingredients for this, may be mor or less.
In order to calculate input GST they must know the quantities of each ingredient used and the purchasing prices of all the ingredients, which vary with the season.
Just imagine how a restaurant will standardise these inputs and GST.
The simplest thing would have been having a single GST rate for all food ingredients, say 5%. And it would have been possible to arrive at a reasonable Input GST.
Remember, in India the cost of goods vary widely from place to place. more  
Builders lobby is very strong and have attained expertise in arm twisting of buyers and
the Govt. The politicians can ill afford to ignore their demands as they need huge funds
to win elections and have interest in many projects. more  
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