GST refund on cancelled property bookings: How homebuyers can claim back the tax paid

Homebuyers who paid GST while booking a flat or plot may be entitled to a refund if their booking is cancelled or the project is stalled. The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has clarified that builders cannot charge GST above the prescribed rate and that buyers are entitled to receive the full amount paid, including GST, if the promoter contract is terminated or the allotment is cancelled.

Homebuyers are required to pay 1% to 5% GST when purchasing a flat. UP RERA said promoters have often refunded only the amount paid for the flat or plot after contract termination or allotment cancellation, while excluding the GST component. It also noted that several complaints have been received regarding builders charging GST above the prescribed rate.

If a builder has not refunded the GST after a project or booking cancellation, buyers can claim the refund themselves. They can apply directly to the GST department. In cases where the builder is still eligible to issue a credit note under GST rules, the promoter must refund the entire amount collected, including GST. If the time limit for issuing a credit note has expired, the buyer can seek the refund directly from the GST department.

To claim the refund, buyers without a GST number must first obtain temporary registration on the GST portal using their PAN card. They must then download and submit Form GST RFD-01 under the “Refund for Unregistered Person” category. The application should include flat booking documents, proof of GST payment and a builder’s certificate. After verification, the refund will be credited directly to the buyer’s bank account.

The government has set a two-year deadline for claiming a refund directly from the GST department. Buyers must apply within two years from the date of cancellation of the agreement or booking. Refund claims below ₹1,000 will not be processed.