GST on Apartment

Yes you are correct. As the appartment is purchased and registered before the introduction of GST then no GST is applicable. During such period, service tax was applicable and that too was also linked with the payment of installments. Completion certificate is the criteria common in both the tax regime. Developer has no right to claim GST from you as he rendered services to the landowner and not to you. 

The payment had been made and registration was done before the construction of the flat then it was the liability of the landowner to collect and pay.

Dear Sir,

Hope you are doing well !!

As per my understanding, you are not liable for GST payment.

For under-construction flats booked prior to July 1, 2017, where the payments were made prior to the GST coming into force, the builder would have already recovered the service tax and VAT, applicable on such payments made. Even if the payment was not made prior to July 1, 2017, but the builder had already raised the invoice or demand, for either the full consideration or part of the balance amount, you would have paid the component of service tax and VAT on it, because as per the point of taxation rules 2011 applicable in case of service tax, the service tax is to be levied at the earlier of the two – the moment of payment or raising of invoice.

Could you lease share the copy of agreement with us? 

Hello Sir,

Yes, his demand is illegal.

GST has been implemented in India from 1st July 2017. If all payment for a property under construction was paid before 1st July 2017, then no GST would be payable on such a property even if the construction is completed and the property is handed over after 1″ July, 2017.

However, this transaction would have attracted Service Tax at the rate of 4.5% because if the invoice was raised or payment made prior to the implementation date of GST, the point of taxation arose before the GST implementation day and the transaction attracts Service Tax and not GST.

However, if a builder raised GST invoice or received payment from a buyer after 1st July, 2017, then GST would be applicable at the 12% rate. Further, from 1st July, 2017, the builder is eligible for availing full input tax credit (ITC) on goods and services for paying his output tax @ 12%.

Hence, you are not required to pay any GST.

Hello,

Yes, the demand for GST from you isn't correct. Since the apartment was purchased and registered by you prior to the GST implementation, there will be no GST liability on it. You would have already paid service tax applicable at that time on the full value of the agreement. So, even if the construction is completed after the date of introduction of GST, you do not have any further tax liability under the GST law, as the GST substitutes the earlier service tax and VAT.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

First of all since payment was made in Pre gst period they must ask for Service tax and not GST and secondly since you have paid amount to landlord he is one liable to pay such amount to government and collect it from you builder has not right to ask such amount from you.

You could be liable for service tax by builder.

Was the entire payment made in pre GST period?

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

Thank you.

Dear Sir,

Can you please share agreement copy entered by you with the party after going through agreement i can guide you for accurate tax liability and how you can fight with builder to ensure proper GST liability.