Development agreement

Save Share

This query is : Open

NILESH ARVIND PATKI (Querist)

11 May 2019 Development agreement done in service tax regime. 2013-14
Till 31/03/2019 , no sale or booking of flat where happen, accordingly new scheme is applicable.
Flat to landowner is not yet allotted.

Query
What is rate of GST applicable for the allotment of flat to landowner after 01/04/2019 .
1% or 18%

CA Anita Bhadra

CA Anita Bhadra (Expert)

12 May 2019 Rate will be 18% but the amount of Tax shall be limited to 1% ( affordable) / 5% ( non affordable
Of value of un booked apartment.

Further , Notification No. 4/2018-Central Tax (Rate) New Delhi, the 25th January, 2018

Liability to pay central tax on the consideration received in the form of development rights shall arise at the time when the developer, builder, construction company or any other registered person,

transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights

by entering into a conveyance deed or similar instrument (for example allotment letter).

NILESH ARVIND PATKI

NILESH ARVIND PATKI (Querist)

12 May 2019 Thanks
It means builder has to charge 1% on value of flat allotted to landowner after 01/04/2019 and not 18%.

CA Anita Bhadra

CA Anita Bhadra (Expert)

12 May 2019 No , its not like that .

Above rule was for GST on TDR ( Transfer Development Right ) to landowner by the developer .

NILESH ARVIND PATKI

NILESH ARVIND PATKI (Querist)

18 May 2019 Then what rate should be builder levy while transferring flat to landowner?

CA Anita Bhadra

CA Anita Bhadra (Expert)

18 May 2019
GST applicable only on un-booked flats handover to landowner by the builder . Rate of Tax on TDR will be 18% but amount of Tax limited to 1% / 5% of the apartments ( Refer Q No. 11 of FAQ released by Government on 14th May 2019 )

I will try to explain the provision with the help of example ( As per my understanding of the provisions)

GST to be paid by builder under RCM on the value attributable to the residential apartments remaining un booked as on the date of issuance of completion certificate.
The formula is as under: (Lower of below two)
(i) GST payable on TDR * Un-booked carpet Area of residential apartment / Total carpet area of the residential apartments in the project

(ii) 5%/1% ( Non Affordable / Affordable ) on value of residential apartments remained un-booked
For Example :-
Value for total carpet Area of Residential Apartments for which TDR is to be paid is Rs 100 Lakhs ,
Value for un-booked carpet Area of Residential Apartment in the project is Rs 20 Lakhs
GST rate on TDR is 18%

GST to be paid by promoter on RCM will be lower of the two – that is Rs 1 Lakh
(a) 100*18%*20/100 = Rs 3.6 Lakhs
(b) 5% ( assuming it is non affordable ) * 20 Lakhs = Rs 1 Lakhs

NILESH ARVIND PATKI

NILESH ARVIND PATKI (Querist)

29 May 2019 Above provision applicable to development agreement after 01/04/2019, if agreement is before 31/03/2019 then which provision should be applicable?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now