Adeeb Cheulkar (18 Points)
04 January 2019Hi,
In under construction property, who does the payment of GST on agreement value? Is it builder or customer?
Normally payment is done on milestone basis, then who is going to do the payment on the given GSTN? Also cheque issued from client will be on builders name or customer name?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(193936 Points)
Replied 05 January 2019
For supply of services by builder to purchaser of Under construction property ......... Supplier is liable to collect GST as per applicable rate and pay it to treasury. The amount is collected over the amount of installments received/charged.
Second part of query is not clear.
Adeeb Cheulkar
(18 Points)
Replied 05 January 2019
Thanks Mr Dhirajlal.
Second question is about payment done for under construction property where buyer pays the scheduled amount as per the agreement. For the scheduled amount, there is GST supposed to be paid. Question comes who is going to pay the amount of GST to government, Buyer or Builder?
Pratik Vijay Doshi
(44 Points)
Replied 06 January 2019
Dear CA Dhirajlal,
Good Morning.
GST is applicable on properties which have not received completion certificate.
1. If we make advance payments now and the balance on registration of the purchase (which will be after OC), will GST be applicable?
2. If yes, only on the advance payments or on full registered value?
3. I read that post 10th Jan meeting, GST on under construction properties will be slashed from 12% to 5%. Do you foresee that it will be effective immediately from 10th Jan?
4. If GST will be applicable on full value (even if the registration of purchase is done post OC), I think, it would be better if we show advance payments as loan to builder and thus not deduct the TDS @ 1% on advance payments. He can repay the loan and we give him the cheque for the full payment, once OC is received so that GST is not applicable. Will that work from tax point of view?
Regards,
Pratik
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(193936 Points)
Replied 06 January 2019
| Second question is about payment done for under construction property where buyer pays the scheduled amount as per the agreement. For the scheduled amount, there is GST supposed to be paid. Question comes who is going to pay the amount of GST to government, Buyer or Builder? |
Builder.............. Buyer has already paid to Builder !!!
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(193936 Points)
Replied 06 January 2019
Pratik Vijay Doshi
(44 Points)
Replied 06 January 2019
Thank you sir.
3. I read that post 10th Jan meeting, GST on under construction properties will be slashed from 12% to 5%. Do you foresee that it will be effective immediately from 10th Jan? No Official comment, but only after notification issued by CBEC.
If this is approved in the 10th Jan meeting, how soon does CBEC issue the notification and whether this is effective retrospectively from 10th Jan or from the date notice is issued?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(193936 Points)
Replied 06 January 2019
"If this is approved in the 10th Jan meeting, how soon does CBEC issue the notification and whether this is effective retrospectively from 10th Jan or from the date notice is issued?"
Within a week..... or late by 01.02.2018, but not retrospective.
CA Roopa Nayak
(Specialized in Indirect Taxes)
(6726 Points)
Replied 06 January 2019
The GST liability is that of the builder
GST to be paid by builder on the payment recieved from customer under agreement entered in course of construction
CA Roopa Nayak
(Specialized in Indirect Taxes)
(6726 Points)
Replied 06 January 2019
CA Roopa Nayak
(Specialized in Indirect Taxes)
(6726 Points)
Replied 06 January 2019
GST is applicable on properties which have not received completion certificate. 1. If we make advance payments now and the balance on registration of the purchase (which will be after OC), will GST be applicable?-Yes on the entire payments-when agreement was entered and even part payment recieved by builder, prior to completion of construction
2. If yes, only on the advance payments or on full registered value? Yes, on the entire ATS[agreement to sell] can pay either on gross including land value at effective tax rate 12%[as on date] or 18% on construction agreement alone
3. I read that post 10th Jan meeting, GST on under construction properties will be slashed from 12% to 5%. Do you foresee that it will be effective immediately from 10th Jan? We have to wait to get details
4. If GST will be applicable on full value (even if the registration of purchase is done post OC), I think, it would be better if we show advance payments as loan to builder and thus not deduct the TDS @ 1% on advance payments. He can repay the loan and we give him the cheque for the full payment, once OC is received so that GST is not applicable. Will that work from tax point of view?
GST is applicable on the entire agreement value, when even part of consideration/ advance towards sale of flat[ was recieved prior to completion of construction]
Regards,
Read more at: https://www.caclubindia.com/forum/who-pays-the-gst-in-under-construction-property--497718.asp?offset=1
Adeeb Cheulkar
(18 Points)
Replied 07 January 2019
Thank you all CA friends. Appreciate your reply.
One more question, "I have question on GST percentage of pre-possession charges for under construction property. The pre-possession charges normally includes below items for property:
1) What is percentage of GST charged on these itmes?
2) And what is the charges in case of property under scheme of Pradhan Mantri Awas Yojna?
CAclubindia
