‘Real’ Profiteering? Over 50 Builders Under Scanner For Not Passing On GST Benefits To Consumers

Director General of Anti-Profiteering (DGAP) is said to be investigating over 50 real estate firms for indulging in profiteering under the Goods and Services Tax (GST).

The agency found that 60 per cent of the 125 developers under its scanner did not pass on the input tax credit benefit to homebuyers. The companies are located across the country and include some of the big names in the real estate industry.

Central and state governments levied 5.5-6.5 per cent taxes on the under-construction properties before GST came into effect. After GST implementation, real estate was placed under the 12 per cent tax slab.

Following this, many builders raised prices though they could claim input tax credits against products and services after paying the taxes. Thus, though their tax liability came down considerably in the GST-era due to tax refunds, they did not lower prices of the apartments.

Commenting on DGAP actions, Niranjan Hiranandani, president of industry body National Real Estate Development Council, said that “material and labour costs, as well as taxes and levies on the real estate industry, had seen a gradual rise in recent years, impacting the overall cost for a homebuyer”.

He added “While each project and location will have different calculations, there is no ‘gain’ as a result of the levies, which came to an end post GST, when one does a simple calculation and would be incorrect to suggest that gains to developers on ceasing of levies post GST were not passed on to buyers.”

This tax credit facility was withdrawn on 1 April after the GST council felt that the consumers are not benefitting from it.