GST on Purchases made from unregistered persons., Goods and Services Tax - GST

[Rajesh Kumar]

Sir/Madam

Please inform whether at least 80% is necessarily required to purchase from registered persons by a builder/ developer even if he sales his flats/ buildings after receiving of completion certificate when he is not required to pay GST. In this case, if he purchases more than 20% from unregistered persons, is he required to pay under RCM for differences even after sale after completion certificate?

Posts / Replies

[Padmanathan Kollengode]

In my humble opinion no. The condition of receiving 80% from registered supplier is applicable only when the promoter is paying tax at 7.5%/1.5% under Notification No. 3/2019 central tax (rate). In your case, the said supply is covered under schedule III and hence neither supply of goods nor supply of service. Therefore, in my opinion the question of applying the notification does not arise.

[vijay kumar]

As per the condition imposed under Nofn.3/2019-CT Rate:

Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the project, whichever is earlier) falls short of the said threshold of 80 per cent., ¹[central tax] shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of ²[nine] percent on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017) shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both;

Thus, the computation of 80% is only upto the date of issuance of CC/first occupation.. As per the entry 5 in Sch. III, sale of building after the date of receipt of CC is neither supply of goods nor service and hence the question of compliance of a GST Notification does not arise after such date. Accordingly, the purchase of inputs and input services upto the date of CC shall be taken into account, which, shall be 80% from registered suppliers. For example, if you have purchased inputs and input services worth Rs.100/- till the date of receipt of CC, Rs.80/- shall be from registered TPs, failing which RCM will apply for the shortfall.

[Shilpi Jain]

Agreed. Not required to comply with 80-20 condition after receiving CC

[PAWAN BANSAL]

agreed with Shilpi Jain