The Goods and Services Tax Council has approved a formal procedure for home buyers to seek refund of taxes collected by real estate firms under cancelled contracts.
“There is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract or agreement for supply of services, like construction of flat or house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over,” said an official statement after the council’s meeting on Saturday.
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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.
Tax experts note that this was a gap in the law as there was no process prescribed for these kinds of cases.
“This move would certainly help home buyers to claim back the GST collected by such suppliers in the event of cancellations. Hope the process would be smooth and hassle-free the process especially since unregistered common man would be claiming refund,” said Saket Patwari, Executive Director, Indirect Tax, Nexdigm.
