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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.

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.

Get More Information on GST under construction property here

View Comments (25)

  • In an under construction project where the builder is registering the agreement on 10% is it right that he can demand 100% gst of total consideration even only 25% work is completed

    • NO, HE CAN'T DEMAND GST ON 100% CONSIDERATION. HE MAY ASK GST ON THE AMOUNT AS MUCH HE RAISED DEMAND LETTER.

  • I had booked an under construction flat sale agreement value 25lakhs affordable sector and had paid 25% agreement value plus 8% GST on 25%, and had applied for 75% hsg loan on sale agreement value, now the builder is asking me to pay full 75% GST on housing loan, The pocession is Dec'2021.
    I want to pay gst as per demand letter as when the builder raise depending upon the construction work. Please guide me am i right i doing so

  • I am purchasing an under construction property from a party who is first party. The first party has paid the full payment with GST to builder.

    Now whether again GST is applicable on resale of under construction flat of a building.???

  • I PURCHASE A COMMERCIAL PROPERTY READY OFFICE FROM DIRECT BUILDER, GST LIABILITIES IS ON READY OFFICE OR GST FREE.

  • sir,
    I have purchased a plot measuring 1200 sq.ft from a builder, who is developing gated community.
    Now I have given contract for constructing a independent house at the rate of 1800/- per sq.ft. to the said developer. Please clarify whether i need to pay GST at 12%.
    2. As per GST rules, it is only sale of
    under -construction of building or flat , where completion certificate has not been issued by the authority, attracts GST .
    3. I am under the impression that since there is only agreement to construct a house has been executed , no GST is payable by me.
    4. Further there is no mention about GST in the agreement between me and developer.
    5. Please advise me in this regard at an early date.
    Thanking you Yours sincerely.
    H.N.Divakaran

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