BENGALURU: Homebuyers cannot be made to pay GST on Bangalore Water Supply and Sewerage Board (BWSSB) water charges meant for domestic use, the Karnataka Real Estate Regulatory Authority (K-RERA) has ruled.
In a significant order, K-RERA directed a private builder to remove the GST levied on the BWSSB water bill of a Kengeri apartment buyer and correct the corresponding demand and construction-stage statements. The authority, headed by chairman Rakesh Singh, said water supplied by a public authority for household use is zero-rated under tax law.
GST may be applicable to water supplied for commercial purposes, but not to BWSSB charges meant for domestic consumption. K-RERA also made it clear that builders cannot pass on project-related expenses to buyers before possession is handed over. Under Sections 11(3) and 11(4) of the RERA Act, the promoter remains responsible for expenses such as municipal taxes, water and electricity charges, maintenance costs and other payments due to government authorities until the flat is handed over to the buyer.
Builder failed to prove payment delay
The buyer had also challenged the builder’s decision to levy delay interest for more than 600 days from February 11, 2024. She told the authority that she had paid the amounts demanded whenever payment requests were raised. However, the builder had not produced emails, notices or messages showing that she had been informed about any pending dues.
K-RERA observed that the builder had failed to provide adequate documentary evidence to prove that the buyer had delayed payment for over 600 days. The authority also noted that there was no evidence to show that the buyer had ignored a prior demand for payment. It held that imposing delay interest without proper records could not be justified.
Rs 1.18 lakh in additional charges
The buyer had alleged that the builder included BWSSB water charges in a payment statement issued in 2025 and then imposed 18 per cent GST on them. She also claimed that an additional Rs 1,18,487 had been charged over and above the water-related dues under the sale agreement.
The builder argued that the apartment had been sold at a fixed, all-inclusive price and that GST was part of the agreed consideration. It also claimed that BWSSB charges were statutory service charges and not part of the base price of the flat.
Rejecting the builder’s stand, K-RERA directed it to withdraw the GST charged on the domestic water bill and rectify the relevant accounts. It also directed the builder to justify the additional GST collection and make a refund wherever applicable.
