APPLICABILITY AND BREAKDOWN OF GST COMPLIANCE ON SPLIT PAYMENTS MADE TO LANDOWNER AND LEVELOPER

DEAR MEMBERS/ EXPERTS,

I NEED CLARIFY REGARDING GST COMPLIANCE BASED ON FOLLOWING TRASACTION DETAILS:

TOTAL CONSIDERATION /PURCHASE AGREEMENT VALUE (AGREEMENT DATE: 29/3/2026) : RS.70,00,000

TDS DEDUCTED UNDER SECTION 194IA 1%  BY THE PURCHASER (MR.A)

PAYMENT TO  LANDOWNER (MR.B) RS.21,00,000 TOWARDS THE LAND COMPONENT.

PAYMENT TO DEVELOPER / CONSTRUCTER DEVELOPER (MR.C) RS. 49,00,000 TOWARDS CONSTRUCTION/ DEVELOPMENT CHARGES.

PROPERTY STATUS: THE CONSTRUCTION HAS BEEN  REGULARIZED VIDE ORDER  HAS BEEN ISSUED BY MUNICIPAL CORPORATION ON DATE:25/03/2026,

GST APPLICABILITY ON DEVELOPMENT/ CONSTRUCTION INCOME OF MR.C 

  1. IF AMOUNT RECEIVED AFTER COMPLETION CERTIFICATE ?
  2. IF AMOUNT RECEIVED BEFORE COMPLETION CERTIFICATE ?
Replies (2)
Quick Summary
This discussion clarifies GST compliance when property payments are split between a landowner and a developer. It highlights that GST applicability on the developer's portion hinges on whether payments are made before or after the Completion Certificate (CC) is issued. Payments made after the CC generally fall under Schedule III and are not subject to GST, while payments made before the CC may attract GST, depending on the property type and applicable rates.

  • Amount received AFTER Completion: No GST applies (Falls under Schedule III).

  • Amount received BEFORE Completion: GST applies on the developer's share (Treated as a supply of construction services under Schedule II).

A key point many homebuyers miss: GST on a property purchase depends on whether the payment was made before or after the Completion Certificate (CC).

If the ₹49 lakh developer portion was paid after the CC issued on March 25, 2026, GST generally does not apply to that portion.

But if any amount was paid before March 25, 2026, GST may apply to those pre-CC payments. The applicable rate can be 1% for qualifying affordable housing or 5% for other residential units.

So the most important question is: Were any payments made to the developer before March 25, 2026? That determines the GST exposure.

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