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GST ON UNDER CONSTRUCTION RESIDENTIAL FLAT IN HOUSING PROJECT

SANJIT DEY (CA Practice ) (31 Points)

22 May 2020

Dear Sir/ Madam

Kindly advise on the below :

An individual has booked a residential flat of 920 sq, ft. in a housing project, prior to 1st April, 2019. he has paid the installments till date alongwith GST.

The individual is now desirous of upgrading to a bigger unit of 1200 sq. ft in the same project. However the Developers say that the GST paid till date will be forfeited and will not be adjusted against payments for the new unit.

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6 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 22 May 2020

I think developers need to issue DEBIT Note under section 35 to the buyer with the increased price of the property with appropriate GST on the same as applicable.

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 23 May 2020

Yes the developer is 100% correct. , the GST collected from you is already being paid to govt account by Developer.
It's upgradation by you ,not by developer , for developer it's being a fresh sale .

SANJIT DEY (CA Practice ) (31 Points)
Replied 23 May 2020

Dear Mr. Rawat

Thank u for the reply. However the sale is not yet complete. 80% of the payment has been made. How can the developer charge GST twice on the amount already paid.

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 24 May 2020

the gst on services need to deposit in advance, hence the developer would have been deposited the gst on payment (80%) reced.

SANJIT DEY (CA Practice ) (31 Points)
Replied 24 May 2020

Dear Mr. Rawat

I agree that the developer has deposited the GST with the Government. But how can he charge GST again on the amount that has already been paid. The Developer says he will adjust the amount already paid against the price of the new flat but GST has to be paid again

Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 25 May 2020

in that case he can ask for gst on remaining balance amount. but......in only case can ask for gst amount , if he is reversing the ITC in proportion to that particular flat.