NEW DELHI Homebuyers will soon be able to claim GST paid on construction services through a defined procedures as recommended by the GST Council on Saturday. The council has clarified applicability of 22 per cent cess on Sport Utility Vehicle (SUV) if it fulfills four specified conditions.

As on date, there is no procedure to claim refund of tax borne by unregistered buyers in cases where the contract/agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. “The Council recommended amendment in CGST Rules, 2017, along with issuance of a circular, to prescribe the procedure for filing application of refund by the unregistered buyers in such cases,” a statement issued post GST Council meeting on Saturday said.

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Parag Mehta, Partner, N.A. Shah Associates felt this was becoming a cost to the customer as refund was not being granted by the service provider and this move will help the general public. Saket Patwari, Executive Director, Indirect Tax, Nexdigm, said “Hope the process would be smooth and hassle-free the process, especially since unregistered common man would be claiming refund.” Agreeing, Saurabh Agrawal, Partner with EY, said this proposal is likely to provide relief to the masses though “its implementation would likely take 1-1.5 years as it would require amendment in state legislatures as well.”


Meanwhile, removing the ambiguity over applicability of GST Compensation Cess on SUV, the Council recommended that the higher rate of compensation cess of 22 per cent is applicable to motor vehicle fulfilling all the four conditions, namely, it is popularly known as SUV, has engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above.

Vivek Johri, Chairman of Central Board of Indirect Taxes and Custom (CBIC) clarified there is no change in rate of tax or cess and total GST will continue to be levied at the rate of 50 per cent (28 per cent GST plus 22 per cent GST Compensation Cess). He also said that there are also issues about MUV (Multi Utility Vehicle) “Fitment Committee will examine issues related with MUV and based on that a clarification will be issued regarding definition and applicability of compensation cess,” he said. At present rate of GST is 28 per cent on MUV and then they attract compensation cess of 22 per cent, but there are ambiguity and like SUV, States are also seeking clarification on MUV.

Commenting on latest develiopment, Abhishek Jain, Partner, Indirect Tax, KPMG in India said the issue of applicable rate of compensation cess for SUVs/MUVs has been in talks for a while. “This issue seems to have been put to a rest with GST council specifying the four conditions for the levy of 22 per cent GST compensation cess levy,” he said.