Clarification about applicability of GST on Under Construction and Ready-To-Move-In Property

As per GST law, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, is a supply of service and liable to GST.

1. Sale of building is an activity or consideration which is neither a supply of goods nor a supply of services (Para 5 of schedule III of the CGST Act, 2017).

2. It flows from the above facts that, sale of ready-to-move-in or completed property does not attract GST. GST is payable only on under construction property as discussed below.

Property for which completion certificate has been issued

Under Construction Property

Entire consideration has been paid to the builder before 1st July, 2017 Part consideration has been paid to the builder before 1st July, 2017
No GST is applicable on ready-to-move-in or completed property as per para 5(b) of Schedule II of CGST Act, 2017 There is no GST payable on such property even if the construction is completed after 1st July, 2017. This attraction will attract Service Tax at the rate of 4.5% because as for the Point of Taxation Rules, 2011 applicable to Service Tax, where the invoice was raised or payment made prior to the appointed date under GST, the point of taxation arose before the appointed day and thus such transaction attracts Service Tax and not GST. 4.5% of Service Tax is applicable on the paid before the 1st July, 2017. However, payment, made by the buyer to the builder on or after 1st July, 2017 against invoices issued on or after 1st July, 2017 shall attract GST @ 12%

RATE OF GST

Effective rate of GST payable on purchase of under construction residence or commercial properties from a builder involving transfer of interest in land or individual share of land to the buyer, is 12% with full Input Tax Credit (ITC). [GST payable @ 18% on 2/3rd of the amount for the property; 1/3rd of the amount having been deemed as value of land or undivided share of land supplied to the buyer.]

Consideration which doesn’t constitute transfer in land or undivided share of land as part of consideration, such as construction services provided by a sub- contractor to the builder, attracts GST at the standard rate of 18% with full ITC.

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Tags : goods and services tax (4100) GST (3694)

10 responses to “GST on Under Construction and Ready-To-Move-In Property”

  1. Sapna Shah says:

    As per the explanation provided for entire considered received before 1.7.2017 and on which ST is paid then no GST is applicable though construction not completed as on 1.7.17, then why the proviso 142(11)(C) is provide as supply is after 1.7.17. Pls. explain.

  2. Venkada ramanan says:

    Please clarify what does mean first occupant …
    Also i need some clarification …. I registered a flat in chennai on 14th July 2017…For this 90% of construction is completed before July 1st… only Bath room fittings and tile finishes are balance …is this condition the flat is considered as ready to occupy ???… whether i have to pay any GST for this ??… please expecting your suggestion i am very confused ….

  3. vinod kumar singh says:

    the original allot-tee wants to sale his unit in a apartment and i want to purchase it. the apartment was completed in the year 2014 .the consideration with service tax was paid by the original allottee to builder,but registration was not taken place,now i want to purchase/transfer the above flat to his name after paying the consideration to the builder but the builder demanded G.S.T on the said matter ?

  4. Akram says:

    Sir,
    We 2 partners have setup a business wherein we sell individual plots (purchased a large chunk of land, divided it into small plots, made roads, boundaries for individual plots, main gate, playing area, etc). Once full payment is realized the individual plot is registered in the name of the party by paying Stamp Duty & Registration charges as applicable
    Is GST applicable on such a setup?
    How much if YES?

    Thanks

  5. K.Jayaram says:

    In the case of sale of an under construction flat the final sale price includes all the input taxes paid by the Builder.As GST is claimed to be a tax on Value Additiion what is the Taxable Value of the transaction as per section15 of the CGST Act.The FM may give a clarification on this point early.

  6. vswami says:

    To Admn.

    This once again gives rise to the same point of grave doubt – repeatedly shared, through this website itself, in several instances, so also elsewhere. That is, whether as reported by the Print media not long ago, such a levy of GST on under-construction contracts had been a matter till then under consideration, with no final decision taken. Despite inquiries made independently, there has been no information available or forthcoming about any further developments.

    You will do a favor to your readers in case have in possession any authentic information in that respect, clarifying whether or not any final decision has since been taken by the FM, and openly pronounced for the public having a vested interest- both promoters and buyers alike,

  7. Rohan says:

    Thank for GST information which i look for many days..So third case still be applicable in below case-

    Under construction Flat booked by paying initial amt + Service tax in Jan’2016 and completed registration and stamp duty payment in month of March-2016.(FY2015-16).

    2017 Dec , till date 70% Construction completed.

    Should builder be demanding GST from Flat purchaser as purchaser has already made payment of Service Tax in FY.2015-16 ?

  8. Sachin Agrawal says:

    In case of ready to move in property you says that there is no gst levied, than what about the Cenvat of Service tax w.r.t to builders

  9. Ravi Kiran says:

    Whether ration of decision of Hon’ble Supreme Court of India in L & T Case (2013) has any impact under GST law? In case of property under construction, whether GST liable on the portion of the property already constructed by the builder at the time of entering of the buyer?

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