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September 24, 2025

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‍GST Refund for Unregistered Persons on Flat Purchase

Buying your perfect home is one of the biggest financial decisions of your life. Understanding the implications of taxes can significantly impact your finances. In India, in the case of a flat purchased as prescribed by the Goods and Service Tax (GST), the rate of taxation is 1% (ITC not available) for affordable housing with the total flat price less than Rs 45 lakhs, and 5% (ITC not Available) for non-affordable housing.

Reality sometimes deviates from our plans. Flat booking cancellation sometimes occurs based on a number of reasons - due to delays in flat projects, financial difficulty or a change in personal circumstances. The good part is, as an unregistered person who has paid GST on a cancelled flat booking, you can claim a refund under Rule 89 of CGST Rules.

GST Applicability on Flat Purchase

Understanding when GST applies to your flat purchase is crucial for knowing your refund rights:

Under-construction properties attract GST at different rates:

GST @ 1% will be applicable if your single residential house falls under an affordable residential housing project. If it is not an affordable residential housing project, you should pay GST @ 5%
These rates are without Input Tax Credit, meaning developers can not pass on the benefit of GST paid on raw materials to buyers

Cancelled booking creates the scenario where GST refunds become relevant. When you cancel your booking or the developer cancels the project, the GST you paid becomes eligible for refund since the actual supply (delivery of the flat) hasn’t happened.

Who is an Unregistered Person?

An unregistered person, in GST refers to a person that does not possess a GSTIN number. Homebuyers usually qualify for this exemption, since their purchase is not a business purchase, but a personal use purchase.

Characteristics of unregistered person:

Individual homebuyers purchasing for residential use
No GST registration required or obtaine
Cannot claim Input Tax Credit on purchase
Still entitled to claim refunds when eligible circumstances arise

Eligibility for GST Refund

Not every cancelled flat booking automatically qualifies for GST refund. You must meet specific conditions:

Primary eligibility criteria:

Booking cancellation – Your flat booking must be officially cancelled by either you or the developer‍
Credit note issuance – The developer must issue a credit note for the GST amount charged to you‍
Timeline compliance – You must file the refund application within two years from the date of the credit note‍
No ITC claimed – Since you're unregistered, you shouldn't have claimed any Input Tax Credit (which you couldn't anyway)

When refund is NOT available:

If you've already received possession of the flat
If the developer hasn't issued a credit note
If you file the application after the two-year deadline

Documents Required

Document	Purpose	Key Details
Booking Agreement	Proof of transaction	Original agreement with GST amount clearly mentioned
Payment Receipts	Evidence of GST payment	All receipts showing GST component separately
Credit Note	Authorization for refund	Must be issued by developer with GST references
PAN Card	Identity verification	Valid PAN is mandatory for all refund claims
Aadhar Card	Additional identity proof	Supports KYC requirements
Bank Account Details	Refund credit destination	Account statement or cancelled cheque

Step-By-Step Refund Process

The refund process has been simplified through the digital GST Portal. Here is your roadmap:

Step1: Secure the Credit Note

Contact your developer immediately after cancellation to request a credit note. This document should clearly mention:

Original Invoice number and date
GST amount being reversed
Reason for credit (cancellation//termination)
Developer’s GSTIN and signature

Step 2: Go to Portal

Go to the GST portal (gst.gov.in), and click on “Services”> “Refund”> “Apply for refund” Since you do not have a GSTIN, you can apply as a guest user.

Step3: Fill out the GST RFD-01 form

Provide the application request in the application refund form by providing:

Your personal details
Transaction details
Bank account for receiving refunds

Step 4: Upload Required Documents

Attach each document within the limits in the requested format (likely pdf), to meet their requirements.

Step 5: Finally Submit Your Application

Fill all information step- by-step the application online and make a copy of the ARN (Application Reference Number). You will use this number to track the status of your refund online.

Timelines for Refund

Timeline is used to track and know the refund process and steps.

Deadline to apply:

Applications must be made no more than two years after the date in question. For cancelled bookings, this is normally two years from the date of the credit note.

Expediting your refund:

Submit complete documentation initially
Respond quickly to any departmental queries
60 days follow up schedule

General Problems & Solutions

Issue 1: Developer Refuses Credit Note

Solution:

Reference your cancellation clause in the agreement
Send formal written request via registered post
Consider legal notice if the amount is substantial

Issue 2: Refund Processing Delays

Solution:

Track status regularly on GST portal
Contact jurisdictional GST officer after 60 days
File grievance through online grievance portal

Issue 3: Incorrect Information Filed

Solution:

File a revised application with correct details
Provide explanation letter for the changes

Frequently Asked Questions

1. Can I claim a GST refund if I don't have a GSTIN?

Yes, absolutely. Rule 89 of CGST Rules specifically allows unregistered persons to claim refunds using their PAN and Aadhaar cards. You don't need GST registration to claim refunds on cancelled flat bookings.

2. What if the builder refuses to issue a credit note?

If your developer refuses to issue a credit note, you can approach the jurisdictional GST officer with your case. You can also file a complaint with RERA, as builders are required to follow proper GST procedures. In extreme cases, legal action may be necessary.

3. Is there a regulatory cap on the time for filing the application for custom duty refund?

Yes, custom duty refund applications must be made within two years of issuance of credit note. This is a hard rule, so once you have the required documents, do not delay submitting your application.

4. What is the typical processing time for a refund?

Generally, GST refunds normally take up to 30-60 days from the time the documents are reviewed and found to be done completely. More complex claims or those with incomplete documentation may take longer.

5. Is TDS being refunded with the GST refund?

No, TDS (Tax Deducted at Source) falls under the Income Tax Act, and you can only get TDS refunded by filing your income tax return. The normal customs duty / GST refund is for the GST portion only, which you paid.

Conclusion

These are some essential points to be remembered:

Make sure to receive the credit note from your developer, as soon as you cancel the flat‍
‍Submit your refund application within two years of receiving the credit note
Keep detailed records of each transaction and communication
Follow up to see the status of your application and answer any question that arise after you submit

The GST refund function ensures that you do not lose money to circumstances that are outside your control. Whether it is delayed projects, financial issues, or a variety of other cancellation reasons, the tax process has a mechanism for refunding your GST payments.

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