• Whether GST is levied on the government value of the property or on the sale deed value?

Im planning to buy a new semi constructed house in Hyderabad. I’m getting different answers from the builders on calculation of GST.

For example, the value of the property is Rs. 5000 per square feet and the size of the house is 1200 sqft. Hence, the total value is 60 lakhs. I’m planning to pay 15 lakhs down payment and remaining 45 lakhs will be paid through a home loan.

The government value for the property is Rs. 1800 per square feet. 

The following are the answers provided by different builders to me.

1. GST is 12% on the value of the house mentioned in the sale deed. That is 12% of 60 lakhs.

2. GST is 12% on the government value of the property. That is, 12% of 21,60,000 (1200 x 1800). No need to pay GST on the remaining amount of 38,40,000. The builder has taken approval from government to pay GST only on the government value.

3. GST is 12% on the government value of the property. That is 12% of 21,60,000 (1200 x 1800). The builder will provide a separate work order for the remaining 38,40,000 for which no GST will be levied.

4. GST is 12% on the loan value of 45,00,000 and not on the down payment.

I’m confused especially on point no. 2. It is surprising when the builder said that he has taken special permission to pay GST only on the government value.

I want to pay the tax properly and does not want to get cheated by the builders. Please help me in understanding the GST concept and which builder is right.
Asked 2 years ago in GST

It is 12% of 60 lacs.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

The first option stated by you is correct. GST will be levied @12% on the total amount of 60 lakhs.

 

 

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

There is no need for separate agreement as the law itself says that GST is not applicable on the value of land and only applicable on the value of the construction of the property. At the time of issue of tax invoice, if builder considers total value of the property then tax will be 18% of 2/3 rd value of the property. Under GST, the value of the land is 1/3 rd of the value of the property therefore effective rate is 12%.

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

Hi,

- No such provision. Please ask copy of approval from bulider and share it on my email.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

Hi,

It should be12% on the value of the house mentioned in the sale deed. That is 12% of 60 lakhs.

 

 

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

No, there is no need of separate agreements.

As it is part of law that the GST will be applicable only for the work order.

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

No such provision.

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

If you are buying an under-construction property, it is considered as availing a service from the builder; hence, you are supposed to pay GST on it. According to the GST law, construction of a building, complex or a part of it, intended for sale to a buyer, attracts GST on the sale price.

 

So, option 1 is applicable in your case.

 

Thanks & Regards,

Payal Chhajed

 

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

Hi,

 

As stated in law - The applicable GST rate for under construction flats, properties or commercial properties in land or undivided share of land is currently at 12% with full Input Tax Credit (ITC).

The actual GST rate for under construction flats, properties or commercial properties is 18%. However, 1/3 of 18% is deemed as the value of land or undivided share of land supplied to the buyer of the property.

 

So,you are not required to enter in two different agreements. 

 

Thanks & Regards,

Payal Chhajed

 

 

 

 

 

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

Hi,

 

As per my understanding/knowledge, there is no provision like that.

 

Thanks & Regards,

Payal Chhajed

 

 

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

There is no need for separate agreements.

 

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

I don't think there is any such provision. Ask the builder for the written approval that he is talking about

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Hi

 

Point 1 is correct. GST shall be levied on the actual consideration paid I.e. 60 lacs.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

GST is applicable on construction only in point 1 above. That is why GST rate has been reduced to 12% instead of 18% considering 1/3rd of the consideration to be land cost.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

There's no such provision. The builder is incorrect. The builder might be considering to register the property itself at government value and take the remaining amount of consideration in black. In that case only this becomes possible.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

Hi

GSt to be paid on 60 lacs @12% .

No seperate agreement required.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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