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GST provisions on Commercial Property (Mall)

CA Abhishek Sharma (Chartered Accountant) (39 Points)

15 June 2020

I intend to construct a commercial complex (mall) on residential land. my query is if
1. I sale under constructed complex partly then what will be the GST treatment & adjustment of ITC of under constructed Property ?
2. if I sale completed shops then what will be GST treatment on sale Nd related ITC?
3. if I rent out the said property then what will be GST Treatment and related ITC provisions.

Note :whethercan I use ITC of related to construction while making the GST payment on all the above cases.. please assist and help.. !!

Thanks & Regards
CA Abhishek Sharma

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4 Replies

Hemal Makwana (Designation) (771 Points)
Replied 15 June 2020

1. Sale of constructed complex before OC will be liable to GST
2. sale.. of completed shops post OC will not be liable to GST and will require reversal of ITC.
3. If you rent out property, you will be liable to pay GST ok rental income

ITC related to construction of property will not be available to you except in a case where you don't let out and sale property before OC.

Additionally please note that ITC related to construction of. mall where you prefer to let out is available based on High Court judgement in case of Safari Retreats which is now pending before Supreme Court. however, there are tribunal. judgement under Service Tax where ITC is allowed. you can avail ITC bt highly prone to litigation. You can avail now and wait for supreme court judgement. It is advisable to avail ITC and do not use it and some builders are also availing under protest since outcome of judgement is pending before SC.

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CA Abhishek Sharma (Chartered Accountant) (39 Points)
Replied 15 June 2020

Thanks Hemal for Immediate Response..
I have one query more that if I use that property for own use for commercial purpose then can I claim and utilised the said ITC on my output tax!??
Thanks & Regards
CA Abhishek Sharma

Hemal Makwana (Designation) (771 Points)
Replied 15 June 2020

ITC related to construction of immovable property or works contract services is available only to those who are in same line of business. In case of Safari retreats judgement, HC allowed on the understanding that without construction of mall you can't provide renting services and tax has been paid by supplier on renting service. Seamless flow of credit shall be available to the supplier. Even if you use it for own commercial purpose, there still exists restrictions on availment of ITC, as I said if you are in same line of business, only then you can avail.

1 Like

Shivam RC (Student) (23683 Points)
Replied 15 June 2020

You cannot claim ITC if you use the Commercial property for own purpose.

Section 17(5) clause (d) of the CGST Act 2017 specifically restricts / blocks it.

"goods or services or both received by a taxable person for construction of an immovable property [other than plant or machinery] on his own account including when such goods or services or both are used in the course or furtherance of business."