ITC Availment

Hey Gangeshwar, this is a crucial GST query for your real estate business. Let me break it down clearly:

1. Can you claim ITC on GST charged @ 5% on flats and duplex when adjusting brought forward ITC?

• When you sell flats or duplexes under the Affordable Housing Scheme or under GST Notification 11/2017, the applicable GST rate is 5% (without ITC).

• Since you are charging GST @ 5% without ITC on outward supply, you cannot claim fresh ITC on inputs or input services related to these supplies.

• However, you can adjust (utilize) the brought forward ITC balance (ITC accumulated from earlier periods or other projects) to pay the GST liability on these supplies. This is allowed because the liability has to be discharged, but no fresh ITC on input services for these supplies can be claimed.

2. Can you charge GST @ 12% on some other project (shopping complexes) during the same year and claim full ITC?

• Yes, you can charge GST at 12% on non-affordable housing projects (like shopping complexes or luxury apartments).

• You can claim ITC on inputs and input services used for these 12% taxable supplies as usual.

• Switching between GST rates (5% without ITC for affordable housing & 12% with ITC for other projects) is permissible during the year, provided you maintain separate accounts and books to track ITC attributable to each type of supply (since the GST rates and ITC rules differ).

• It is critical to avoid any ITC mismatch or misuse; for example, ITC used for 12% supplies cannot be diverted to 5% supplies, and vice versa.

Summary

Important:

• Maintain separate records for the two categories of supplies.

• Follow the conditions prescribed in the GST notifications carefully.

• Be prepared for possible GST audits to justify your ITC claims and tax rates charged.