The Uttar Pradesh Real Estate Regulatory Authority has taken a significant step to safeguard the interests of homebuyers by clarifying the procedure for refund of excess Goods and Services Tax (GST) collected from allottees. The State Tax Department has put in place an online mechanism to ensure that eligible homebuyers can claim a refund wherever a promoter has collected GST in excess of the prescribed rate. At the same time, all real estate promoters in the state have already been directed earlier by UPRERA to strictly adhere to the GST rates notified by the Government.

UP RERA has stated that in all projects registered with the Authority, GST should be collected strictly in accordance with the rates notified by the Central Government. Information regarding the applicable GST rates has already been communicated to all registered promoters and real estate agents. In this regard, UPRERA has earlier issued an office order on 8 January 2025, which is available under the circular section of the Authority’s Web portal. However, the Authority has received information indicating that in certain cases, allottees have been charged GST at rates higher than those prescribed.

Refund Procedure Clarified for the Benefit of Homebuyers

To provide relief in such cases, UPRERA has, in consultation with the State Tax Department, clarified the procedure for claiming a refund of excess GST paid by homebuyers. Under this mechanism established by the GST department, if an allottee has paid GST while purchasing a flat or availing construction services, but subsequently the project is cancelled, the agreement is terminated, or the allotment is otherwise cancelled after the statutory time limit for issuance of a credit note by the promoter has expired, the allottee will be eligible to claim the GST refund directly from the GST department.

For this purpose, an unregistered allottee will first have to obtain temporary registration on the GST portal using his or her Permanent Account Number (PAN). Thereafter, the refund application may be submitted in FORM GST RFD-01 under the category “Refund for Unregistered Person” along with the prescribed form, proof of tax payment, supporting documents and the necessary certificate issued by the promoter. The refund claim will be processed and sanctioned by the competent authority after verification of the application and supporting documents, subject to eligibility under the applicable GST provisions.

Timelines and Eligibility Conditions to be Followed

The GST department has clarified that where the statutory period for issuing a credit note is still available at the time of cancellation or termination of the agreement, the promoter shall issue the credit note and refund the amount, including GST, to the allottee. Only in cases where the statutory time limit for issuing a credit note has expired will the allottee be required to file a refund application independently.

The department has further informed in its circular that such refund claims may be filed within two years from the date of cancellation or termination of the agreement. However, refund claims involving a GST amount of less than ₹1,000 shall not be admissible.

Promoters Directed to Ensure Full Compliance

UPRERA has directed all registered promoters to ensure strict compliance with the notified GST rates and not to collect GST at a rate higher than that prescribed under the applicable notifications under any circumstances. The Authority has further clarified that wherever excess GST has been collected from an allottee, necessary action shall be taken to ensure refund of the excess GST amount in accordance with the applicable provisions and the guidelines issued by the State Tax Department.

The instructions of the Authority issued to the real estate promoters and real estate agents is available under the circular section on UPRERA webportal www.up-rera.in along with the circulars issued by the GST department wherein it has been reiterated that transparency, accountability and protection of consumer interests remain its highest priorities. While ensuring that the legitimate financial interests of homebuyers are fully protected, UP RERA expects all promoters to strictly comply with the applicable GST provisions and avoid any irregularities. The Authority believes that this initiative will not only enable eligible homebuyers to recover the excess GST paid by them but will also strengthen tax compliance, transparency and consumer protection in the real estate sector across the state.