A recent Appellate Authority for Advance Rulings (AAAR) order in the case of a Thane-based developer will gladden the hearts of buyers of under-construction properties, as it could translate into reduced costs.
The appellate bench held that charges for several services collected by the developer, Puranik Builders, such as for water connection, electric meter installation and deposit for meter, development charges and legal fees are “inextricably linked” to the primary service of construction. These charges will be part of a “composite” or bundled supply and will be subject to Goods and Services Tax (GST) at the rate applicable to construction services — which is a lower rate of 12%. The Authority of Advance Ruling, in its August 2021 ruling, had held that charges for all other services provided by the builder were independent services and thus subject to GST at 18%. This led to Puranik Builders filing an appeal with the AAAR and the earlier order was partly reversed.
Source a2ztaxcorp
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