Yes, the builder is correct. GST will be applicable on all the construction made on or after 1.7.2017 even if the agreement is done before.
If the CC is received before 1.4.2017, then GST wont be applicable.
Applicability of GST on JDA signed before 1st July 2017
Hi,We have a piece of land and we entered into a JDA on 2016 for the development of it with a reputed builder. The land was bought by my grand father in 1957.The same has been inherited by my father (current sole owner) and he entered into this JDA. As per JDA we will be getting 7 flats as part of JDA.Now my questions are: The time we entered this JV there was no GST and the builder agreed to pay the Service Tax for our part.The construction of flats are scheduled to be complete by end of 2019. Do we or the builder have to pay the GST for our(landowner) share of flats? We will be selling our shares once the CC is received.So there wont be GST while selling our flats,but do we need to pay the GST to builder for our shares (I mean for the construction service he is providing to us). My understanding is as the JDA is signed before GST was effective so we(landonwers) will not be paying any GST for our portion of construction.But all customers buying developer or landowner share will have to pay GST @12% on all transactions after 1st July 2017. The builder is asking us to pay the GST before we take possession.Is it correct?
Asked 6 years ago in GST
But wont be the value of land considered while calculating the final GST amount to be paid to builder? As per the current scenario if we pay 12% GST to builder from our pocket now we can't even claim that while selling to our customers(customers buying landlord share of flats) as we will sale our shares only after we get CC and GST is not applicable on Ready To Occupy properties. SO how to recover the same? Also while paying the STCG tax for sale of our share flats can we get any benefit of tax deduction as we pay the GST to builder?
Asked 6 years ago
Hi
The builder is correct. GST shall have to be paid. No matter the agreement was signed before, the construction will be done after GST implementation and so GST shall apply.
Yes, at the time of sale, you can take benefit of GST paid as the same will be one part of your coat and reduce your short term capital gain.
Hello,
In order to guide you whether GST will be applicable or not, I will have to go through your entire JDA.
But yes, for capital gain purposes you can claim the GST as a cost of acquisition.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
GST has replaced Service Tax w.e.f. 1st July 2017. There is change in the nomenclature of the tax but no significant change in the levy of tax. Thus in your case as the builder has agreed to pay the Service Tax for your part, you may ask him to pay GST also on your behalf.
Whether you pay or the builder pays, GST is applicable in the place of service tax.
If you are paying GST, it is part of your cost of acquisition for the purpose of calculating capital gains.
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