Building construction

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This discussion clarifies that income from selling residential properties constructed on one's own land cannot be filed under Section 44AD. It highlights crucial Goods and Services Tax (GST) rules for builders, including the requirement to source at least 80% of inputs from registered suppliers to avoid Reverse Charge Mechanism (RCM) penalties. Specifics on GST for cement, capital goods, development rights, and construction services are also covered.

Shakthi

Shakthi

(Querist)
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17 February 2024 Hi Assessee constructs residential property in hos own land and sells it. Can he file income u/s 44AD for the building sales

RAJA P M

RAJA P M (Expert)
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17 February 2024 No... He can't file this income under section 44AD.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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17 August 2025 To strengthen the understanding:
Builders must ensure at least 80% of inputs and input services are sourced from registered suppliers. Any shortfall incurs 18% GST under RCM.
Cement procurement from unregistered persons automatically triggers 28% GST under RCM, regardless of the 80% rule.
Capital goods acquired from unregistered persons also attract RCM billing.
Development rights, FSI, and long-term land leases provided to a promoter are taxable under RCM through separate entries.
Construction services—the erecting of a building intended for sale—are generally GST liable @18%, with an effective rate close to 12% when valuing land correctly.

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