GST chink likely to increase ITC

A recent clarification by the indirect tax department may leave a loophole in the goods and services tax (GST) system by enabling the real estate companies to claim higher input tax credit than they are entitled to. In a set of frequently asked questions (FAQs), the Central Board of Indirect Taxes and Customs (CBIC) cleared the air on GST rates on under-construction houses. This followed the GST Council’s decision to allow the real estate companies to choose between the lower rate of 5 per cent without input tax credit or a higher rate of 12 per cent.