GST on under construction property belonging to owner

- In case of JDA, on or after 01.04.2019, builder is liable to pay GST on unbooked units on the date of completion certificate or first occupation whichever is earlier. Landowner is not liable to pay GST as the liability is shifted on the shoulders of the builder. In your case, main question is applicability of Income tax provisions. As you are planning to sell under construction property, capital gain will be calculated as per the normal provisions of the law. Please take phone consultation for detailed discussion.

Dear Sir,

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GST is though applicable to the supply of development rights, w.e.f.01.04.2019 the responsibility to pay tax is no more in the hands of the landowner, rather it is shifted to the builder under reverse charge mechanism (RCM). It is immaterial whether the landowner is registered under GST or not. So it can be construed that transfer of development right is not taxable in the hands of landowner w.e.f.01.04.2019. [Notification No. 13/2017-CT (R) dt. 28.06.2017 as amended by Notification No. 05/2019-Central Tax (Rate)] Dated: 29th March 2019]

In cases where landowner further sales his share of constructed area or flats allotted by the builder and he receives any amount as advance from the prospective buyers during the construction stage then the landlord will be liable to pay GST on it. No GST is applicable if such sales are made after completion of construction.

Rate of tax –

In case of further sales of area/flats by the landowner, he will be liable to pay tax @ 1% or 5% depending on the nature of the residential apartments viz: affordable or non-affordable category. However, if the developer opted for the existing system of 8%/12% then the landowner has also to opt for the same. (Refer FAQs dated: 14.05.2019). Further, he is also entitled to claim ITC charged by the builder in both the situation (old rates and new rates) on the consideration value against the transfer of development right in land.

We may discuss the issues further in detail.

It is advisable to take a phone consultation for detailed discussion.