Mumbai
Mumbai residents purchasing new homes are facing a significant challenge regarding car parking arrangements.
Builders are now charging separate fees for open and closed car parking spaces, further adding to the financial burden of flat buyers.
The recent decision by the West Bengal Bench of the Appellate Authority of Advance Rulings (AAAR) has upheld the need.
for Goods and Services Tax (GST). to be levied on car parking fees, making the purchase of a house even more expensive.
The AAAR in West Bengal emphasized that the right to sell or use a car park should not be considered an inherent part of the property purchase.
As a result, car parking fees cannot be treated as a bundled service, warranting the imposition of GST.
This ruling, which emerged from an appeal by Eden Real Estate, means that flat buyers will now have to bear the additional burden of GST on car parking charges.
Previously, starting from April 2019, a 5% Central Sales Tax (CST) was applied to non-affordable housing projects without the provision of input tax credit.
However, under the revised regulations, builders of ongoing projects now have the option to pay the previous GST rate of 12% while being eligible for input tax credit.
This allows builders to offset the tax paid on inputs. Unfortunately, this decision further compounds the financial strain on flat buyers.
Consequently, individuals looking to purchase a flat will be left with two choices: either forego the luxury of having a car parking space or be prepared to pay a higher price for the property.
Opting for a flat without parking will undoubtedly create additional challenges for buyers.
Anita Rastogi, Principal at Price Waterhouse, highlighted that this ruling will particularly impact those who wish to buy houses with parking facilities.
It is worth noting that in 2020, the Maharashtra Real Estate Regulatory Authority (MahaRERA) made a significant ruling in favor of flat buyers.
The authority decreed that builders cannot charge separate fees from homebuyers for open car parking unless the parking space is enclosed.
In such cases, builders may recover a maximum of four lakh rupees separately.
MahaRERA stated that open car parking falls under the category of common areas, deeming the practice of charging separate fees by builders as incorrect.
