Builders may face probe for not passing on benefits of GST to consumers

Builders in the country who did not pass on the benefits of GST policy to consumers are likely to face investigation soon. The new development comes after a National Anti-profiteering Authority panel received several complaints regarding the reluctance of real estate firms to pass on the benefits of a tax cut to their customers.

A standing committee of officials who are attached to the recently established National Anti-profiteering Authority (NAA) is all set to investigate the complaints, a report in the Mint stated.

This would mean that the builders will become the first group that would come under the investigation of the authority which, according to a source, will direct the Director General of Safeguards, an investigating body within the Central Board of Excise and Customs, probe the issue.

While in the earlier tax regime, the total tax burden was about 9 percent without the input tax credit, the actual tax burden under the new GST regime is quite low due to high component of tax credits.

This meant that the builders should have reduced the EMI that the customers were to pay them in proportion to this. However, not only are some builders declining to provide this benefit to the consumers but are using this opportunity to collect higher amounts.

“We have received complaints against builders from across India. The common tenor of the complaint is that the builders have increased the prices of the houses citing GST. The complaints will now be looked into as the anti-profiteering authority has now been set up,” an unnamed official was quoted as saying in the report.

The investigation will mean that the real estate firms who will now come under the scanner and they will have to give an explanation for their actions including any increase in price following the introduction of GST.

However, there are widespread concerns among experts that the existing anti-profiteering provisions in GST will not be sufficient enough to ensure that the benefit of new taxation system will reach the common man. They argue that there is nothing in the present law that will prevent businessmen from increasing the prices of products that do not come under the Essential Commodities Act.