GST Liability under JDA for builder

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 ?
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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