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I had booked a 2BHK apartment with a well known builder. As per the agreement and payment structure I paid all the installments but the last one, which I was supposed to pay at the time of possession. The construction work was supposed to get completed in May-June 2017.

But when the builder learned about GST, which was to start from April 2017, I was told, over a phone call from the builder's office that the tax, which was 3.75% at the time of agreement, will now be increased to 12%. (This happened a few days before start of April.) They told me to pay whatever amount I can (to avoid as much tax as possible).

The amount pending in the final installment was 91000 + ST (Service Tax). I then made a payment of 60000.

Now awaiting possession, there were further delays and finally in February 2018 I was sent a letter that the apartment is ready for possession. But the GST amount charged was 10920, which is 12% of 91000 (full installment) whereas it should have been 12% of only the pending amount.

When I went to argue with the builder's spokesperson, I was told that GST is to be paid on the full installment and it cannot be calculated on partial payment. So I asked why didn't they return my payment of 60000, to which they replied that they also didn't exactly know the GST concepts at that time.

Now, that means, the 60000 that I had paid almost an year back has no extra value for me. But if they had returned it at that time I could invest somewhere and earn some interest.

Second thing, the amount is in builder's bank account for an year (he may have invested in some funds etc.) from which he must have definitely earned some interest at my expense.

By law, can I ask the builder for an equivalent interest or discount in final payment?

Is this ethical on builder's part?

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    This is in India? I am SHOCKED, SHOCKED to hear of a development tie-up :) – Fattie Feb 27 '18 at 17:59
  • I know nothing of Indian law, but when the GST rate increased in New Zealand, the supplier got the option to pay GST at the lower rate on instalment payments made before the cutover. Normally, GST is not due until the title passes to the purchaser. – Rupert Morrish Feb 27 '18 at 20:10
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Is this ethical on builder's part?

Probably not ethical.

By law, can I ask the builder for an equivalent interest or discount in final payment?

This is more of legal question and better suited for law.stackexchange. It would depend on the nature of your contract with Builder. Was there an explicit letter from builder asking for funds so that GST will applicable only on reduced amount?

Essentially establish that you paid Rs 60,000 in advance when it was not due and this was asked by builder and there is contract that says interest will be payable on advance amount.

If so you can file a complaint in consumer court. For the given amount, it may or not be worth the hassle involved.

If the Sale Contract or the RERA date is June 2017 and was delayed you can again get benefit.

  • Thanks Dheer for your time and this info. I will ask it on law stackexchange site. :) – SharpCoder Feb 28 '18 at 16:55

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