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GST on services on redevelopment

05 July 2018

when the free hold plot of the landlord is given to builder for redevelopment , who is offering services to whom.Plot owner to builder or builder to plot owner.In this case who are suppose to pay GST and on which items if owner is getting flat ,corpus ,rent and transportation from builder who will sell the extra flats without any financial investment from the owner of the plot.Thanks and. Regards.

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7 Replies

White Devil (154 Points)
Replied 05 July 2018

Builder has to pay gst @ 18 on sale of flatsFlats given to owner of the land purchase consideration Agreement should be clear

Sandhya Lawate (47 Points)
Replied 05 July 2018

is there any GST payable by land lord in the whole project

White Devil (154 Points)
Replied 05 July 2018

As its a non monetary transfers No gst payable. If the transaction involves monetary consideration tds n tcs provisions will be applicable under gst

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Sandhya Lawate (47 Points)
Replied 05 July 2018

we are getting corpus ,rent and transportation ,is this a monetary consideration ? if yes then at what rate we should pay the GST ? Builder told us that we will have to pay GST on construction cost of the flat on possession which he is giving us on our surrender share of land . if it is to be paid at what rate we should pay ?

Pankaj Rawat (GST Practitioner) (55057 Points)
Replied 05 July 2018

No GST liability on the land owner since he is essentially selling an immovable property, share in land. Hence, no GST. Also, this transaction in not in furtherance of business either

Whereas in the case of the builder, there are 2 transactions:
1. Construction - The sale consideration is equivalent to value of units obtained - GST applicable

2. Sale of Residential Units - GST applicable if advance received before completion. Otherwise its a sale of an immovable property not liable to tax.

Yes ,.. builder is correct he has pay GST on construction but on the he can adjust same on his outward supply (flat sold)

Sandhya Lawate (47 Points)
Replied 05 July 2018

It means we need not pay any GST on possession ,we have to ask the builder to pay for our flat

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 05 July 2018

The builder is going to provide you a X square feet of flat + pays rent etc. This is a case of monetary consideration which is = amount expended by him towards other costs incurred till he gives you possession. Non-monetary part is the cost of construction + 10 % as per the valuation law. ( which is better than paying on open market value ( which may not be possible to arrive at.

Builder will charge you GST on above. If you are going to take possession and stay or later sell then that GST amount is a cost to you.

However if you are selling before construction is over, you can avail credit of the amount charged by the builder and collect from the prospective buyer.