GST on landlord share after getting OC

Dear Sir,

Hope you are doing well !!

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 @ 1% or 5% depending on the nature of the residential apartments viz: affordable or non-affordable category.

Please note that No GST is applicable if such sales are made after completion of construction.

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

If the landlord receives his share after OC and the landlords has not further sold the flats by charging GST the landlord will not be eligible to claim ITC.

As far as GST payment is concerned all payments of GST has to be done by builder/developer whether it is sale of flats before OC and whether it is RCM on development rights.

Where flats are sold after obtaining OC in the sense that no payment was received before OC then there is no GST on flats. Such sale is outside the purview of GST. ITC reversal will be required on such sale if ITC was claimed by builder/developer.

-  On Supply of development rights on or after 01.04.2019, liability to pay GST is on developer on RCM basis. Builder is liable to pay GST on unbooked units on the date of completion certificate or first occupation whichever is earlier.

Dear Sir,

There are 2 components of GST involved as a landowner. 1 being on transfer of development rights by landowner to developer and the other on receiving construction services by the landowner from developer.

In your query you are asking in relation to receiving the share of flats by landowner, which is the 2nd service, i,e. receiving construction services by the landowner from developer.

In this scenario, the tax liability is on the land owner to pay to the developer. The rate may be 1% (in case of affordable housing), 5% (other residential projects, if started after 1-Apr-2019 or projects opted under new scheme if started before 1-Apr-2019) or 12% (projects started before 1-Apr-2019 and opted to continue under old scheme).

Since there is no mention of GST in the DA, therefore the landowner is ideally liable to pay the same to the developer, unless otherwise specifically stated in the agreement.

Further please note that simply receiving the landowner share after receipt of CC will not absolve him from his liability of GST, since the consideration was already agreed upon before the construction began and the agreement was finalised and executed.

Please advise in case of any other clarification.

Thank & Regards,

CA Aditya Dhanuka.

Builders is liable to pay gst on RCM basis.

Hi

If you sell the flat after receiving the completion certificate and after you receive the possession of flat from builder you don't need to pay GST builder need to pay GST on RCM basis.