Owner's obligation to pay GST to builder after C.C.

Dear Sir,

Hope you are doing well !!

When a developer enters into a development agreement with a Landowner, GST would become payable by the Landowner when the developer transfers possession or the rights in the constructed complex, building or civil structure, to the Landowner by entering into a conveyance deed or allotment letter.

Hence, when the Landowner receives a constructed property from the Developer in exchange for providing land, the Landowner would become liable for payment of GST.

As I see in your above mentioned case, the land holder is transferring the rights in property and in return is getting a share in revenue/area on sale of the property to be constructed.

In your case GST liability will arise on both events. 

1) Sale of Rights in land by Land Owner to developer.

2) Construction Service provided by developer to Land Owner.

So, you are liable to pay GST to builder.

Thanks & Regards,

Payal Chhajed

Further as per GST Law, if an immovable property is sold before obtaining CC, then GST is leviable .

But if it is sold after obtaining CC, No GST IS PAYABLE.

So if you receive any advance money on Bookings of these flats, before obtaining CC, GST will be leviable. Otherwise no GST will have to be paid on sale of these Flats.

Yes you will be liable to GST in JDA as consideration from your end flew before completion certificate.

Regarding capital gain tax you need to pay it after receiving completion certificate and possession.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Capital gain will be taxable when the completion certificate will be issued.

Hi,

- Builder will charge GST at the time of receiving payments from you. It is not related with the possession or C.C. 

- If no flat is sold before obtaining the C.C., then income tax would be applicable after obtaining the CC.

Thanks

Yes, you need to pay GST to the builder. Since it's a Joint Development Agreement and not a general case, the receipt of completion certificate has no relevance.

Capital gains shall be taxable in the year when completion certificate is received.

Hi

Capital gain tax to be paid after CC only.

Hope it helps