Homebuyers Can Claim Refund of Excess GST Paid On Cancelled Property Booking, Says UPRERA

Homebuyers in Uttar Pradesh who have paid excess Goods and Services Tax (GST) on property purchases now have a clearer route to recover their money. Aspiring buyers who might have invested in properties and later stepped out now have a provision to get their money back.

The Uttar Pradesh Real Estate Regulatory Authority (UPRERA) has issued guidelines clarifying the process for claiming refunds on GST payments that were collected by developers, especially in cases where property bookings were later cancelled or the agreements were terminated.

According to UPRERA, GST in all registered projects must be charged in accordance with the rates defined by the Centre. The authority has pointed out certain lapses in the system, where homebuyers were charged GST at higher rates than defined, despite the earlier directions given to promoters and real estate agents.

What Did UPRERA Do

UPRERA has now clarified that a refund mechanism will be made available to the aggrieved homebuyers; this came following consultations with the state tax department.

The guidelines are relevant for homebuyers who paid GST while booking a flat, but later cancelled the booking; cases like terminated allotment by the developer and the authority have also been included in this provision. In situations like the latter, eligible allottees can seek a refund straight from the GST department.

How To Get This Refund

The process needs the unregistered homebuyers to get a temporary registration on the GST portal using their Permanent Account Number (PAN).

Once the buyer is registered, they can file a refund application through Form GST RFD-01. This form will be under the category of “Refund of Unregistered Person.”

Applicants must submit proof of tax payment, supporting documents, and a certificate from the promoter in order to back their claim as rightful. The applications for refund will be examined by a competent authority and will be sanctioned after verification, which is subject to eligibility under the GST provisions.

Further, the GST department has said that a direct refund application may not be required in every case. In certain cases, where the agreement is terminated recently or a credit note is available when the booking was cancelled, the promoter can issue a credit note and make the refund of the amount, including the GST. Buyers need to approach the GST department only when the deadline for getting a credit note has lapsed.

UPRERA has also laid down the timelines and the eligibility clauses. Refund claims can be filed within two years from the date of cancellation or termination of the agreement. However, claims that involve a GST amount which is less than Rs 1,000 will not be acceptable. At the same time, UPRERA has directed all registered promoters to ensure strict compliance with GST rates and refrain from collecting tax beyond the stated limits.