Where a land owner enter into JDA with builder having following terms:
Total flats 100
Flats to landowner 30
Flat sold before issue of cc or first occupation 63
Unsold flats in issue of cc 7
Sale consideration of flat nearest to date of development agreement 80 lakhs
Sale consideration of flat nearest to issue of CC 100 lakhs.
Tax payable lower of a or b
a. 80 lacs*30 flats*18%× 7 flats divided by 100 flats=30.24 lacs
b. 7 flats*100 lakhs*5%= 35 lacs.
Thus GST payable by builder under RCM will be 30.24 lacs.
Is this calculation is correct ?
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GST Liability under JDA for builder
Replies (1)
Hi Krishna! Let me break down the GST liability under JDA for the builder in this scenario.
Background:
-
Total flats: 100
-
Flats to landowner: 30
-
Flats sold before CC: 63
-
Unsold flats at CC issuance: 7
-
Sale consideration at development agreement (DA): ₹80 lakhs per flat
-
Sale consideration at CC issuance: ₹100 lakhs per flat
-
GST rates applicable:
-
18% on value at DA (under RCM for landowner's flats)
-
5% (under composition scheme for real estate) on value at CC for flats sold before CC
-
GST liability under RCM on builder for unsold flats:
GST payable = Lower of:
-
(a) Value based on DA × 18% × proportion of flats unsold
-
(b) Value based on CC × 5% × proportion of flats unsold
Calculation:
-
(a) = 80 lakhs × 30 flats × 18% × (7/100) = ₹30.24 lakhs
-
(b) = 7 flats × 100 lakhs × 5% = ₹35 lakhs
Lower of (a) and (b) = ₹30.24 lakhs
Conclusion:
Your calculation is correct. The builder's GST liability under RCM for the unsold flats is ₹30.24 lakhs, as per the rule that tax payable is the lower of the two values calculated.
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