GST ON UNDER CONSTRUCTION FLAT PURCHASED & SOLD BY BUILDER AS AN INVESTMENT, Goods and Services Tax - GST

[Kalpesh Shah]

Respected Experts,

Your Opinion is required on following Querry.

Facts of the Case

My Client is a Partnership Firm and their Nature of Business is Builders & Developers.

They want to Purchase an Under construction Residential Unit (1 Unit) by Paying Applicable GST.

If they resale this Residential Unit before receiving Occupancy Certificate, then what will be Rate of GST Applicable to them ? Is it 18% or 12% (i.e. after allowing 1/3rd Deduction for Land Component in the unit Value) ?

Is GST paid at the time of Purchase of this unit will be allowed as ITC ?

Posts / Replies

[Himansu Sekhar]

Is it possible that sale deed will be made for an under construction building?

[KASTURI SETHI]

Yes. The supply/sale of under construction property is legally allowed. It is also practically possible.

In the above scenario, rate of GST is 12%.

Yes. ITC is permissible under Works Contract Scheme/Service. Not hit by Section 17(5) of CGST Act.

[Kalpesh Shah]

Kasturi Sir

Thank you for your views.

But if my client is entering into this transaction as an Investor and not as a builder & Developer, then too it will get 1/3rd Deduction for Land Component ?

[KASTURI SETHI]

Investor is behind the curtain. He is not supplier of service.