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Under GST law, to levy the GST on any of the activity, the activity should fall under the definition of the ‘supply’ which defined under the Section 7 of the Central Goods and Services Tax Act, 2017 (‘CGST Act, 2017’) which inter-alia includes all the forms of the supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental or lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of the business. The definition of the supply covers all the forms of the supply including the transfer of the land.

Transfer of Land-

It is pertinent to note that CGST Act, 2017 includes the Schedule III which includes some specific transactions or activities which shall not be treated neither a supply of the goods nor a supply of the services.

Para 5/Entry No. 5 of this schedule specifically includes the sale of the land. Therefore, the sale of the land will not subject to GST and there is no question of the ascertainment of the rate of GST on it.

Construction Activity-

As per the clause 5(b) of the Schedule II of CGST Act, 2017, construction of a flat / house / complex intended for sale is a supply of service.

Para 5(b) of Schedule-II Supply of services” Construction of 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.”

Explanation: For the purposes of this clause-

(1) The expression “Competent Authority” means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely-

(i) An architect registered with the Council of Architecture constituted under the Architects Act, 1972(20 of 1972); or

(ii) A chartered engineer registered with the Institution of Engineers (India); or

(iii) A licensed surveyor of the respective local body of the city or town or village or development or planning authority;

(2) The expression “construction” includes additions, alterations, replacements or remodelling of any existing civil structure.

It is to be noted that if the entire consideration towards the sale of the Flat/House/complex is received after the receipt of completion/occupancy certificate from the competent authority or after its first occupation, whichever is earlier, then such activity is neither a supply goods nor a Supply of Service, as provided CGST Act, 2017.

Residential Complex- ‘Residential complex’ means complex comprising of a building or buildings, having more than one single residential units- para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate)both dated 28-06-2017 effective from 01-07-2017.

Single Residential Unit- ‘Single residential unit’ means a self-contained residential unit which is designed for use, wholly or principally, for residential purpose for one family- para 2 of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-06-2017 effective from 01-07-2017.

Meaning of ‘First Occupation’.

As per Para 5 of Schedule III read with para 5(b) of Schedule II of CGST Act, if entire consideration is received ‘after issuance of completion certificate/occupancy certificate by competent authority or its first occupation whichever is earlier’ the promoter (builder or developer) is not liable to pay GST, even if completion certificate.

It is pertinent to mention that in real life situation it takes years to get completion certificate from Governmental authority even where actual completion of the project completed long back. By that time the apartments are occupied by owners and inhabited by them. So in such a situation in absence of Government Certificate it really becomes difficult to determine the exact date when the project was completed or first occupied. The developer issues possession letters usually only after receiving ‘completion certificate’ from the Architect/Engineer. Hence date of ‘first occupation’ will be only after the date of issuance of ‘completion certificate’. Thus, it will be the date of issuance of the “completion certificate” which will be the relevant date to determine the taxability of the units. If it is available or issued by Government Authority (wherever applicable) then there is no dispute.

Construction related activities which are outside the purview of GST

As per FAQ (Part I) No. 29 issued by CBI &C vide circular F No. 354/32/2019-TRU dated 07-05-2019, first occupation means ‘first occupation’ of the project in accordance with laws, rules and regulations of State/Central Government or any other authority. Thus, mere staying in the apartment before obtaining completion/occupancy certificate will not be considered as first occupation. Thus, the FAQ (Part I) treats ‘first occupation’ as equivalent to completion/occupancy certificate. If so, the words ‘or its first occupation whichever is earlier’ become redundant. It is well settled that an interpretation which treats some words as otiose or redundant should not be adopted.


GST is not applicable to the following construction-related transactions/activities:

  • Sale of ready to move in flats [clause 5(b) of the Schedule II of CGST Act, 2017]
  • Resale of property [clause 5(b) of the Schedule II of CGST Act, 2017]
  • Sale/purchase of land [para 5 of the Schedule III of CGST Act, 2017]

In all the above cases, the sale-purchase activity does not include the supply of goods or services as per the GST Act, hence no GST is applicable to these transactions.


Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.

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  1. DP Awasthi says:

    There is confusion from buyer side about the higher price to be paid for the same category of flats, possession taken at same time. Because one has applied when construction was not yet started and other have applied after construction completed.

  2. DP Awasthi says:

    There is issue of different prices charged from the Allottees of the flats (at Bindraban, Palampur) as
    allotted to her vis-à-vis the ones allotted subsequently to others, due to charging of GST on
    the flat booked and non charging of GST from other allottees in the same building, same construction, same floor, same money consideration and possession of completed flat around same time.

  3. B.C.BHAT says:

    Dear Sir,
    What is the exact meaning of Sale of Land. If 10 acres land is converted in to Plots with Road, Drainage, Electricity and sold, is it Taxable ????
    If so on what value ???

  4. OM PRAKASH JAIN says:

    Whether the mandatory deduction of 1/3rd for value of land is valid as given in Para 2 of notfn 11/2017-CT(R) dated 28.6.2017 in Construction Services in the light of following case laws;
    Munjaal Manishbhai Bhatt v. Union of India & Ors.(2022) 37 J.K.Jain’s GST & VR 397
    Union of India & Anr. v. Mohit Minerals Pvt. Ltd. & Ors.(2022) 37 J.K.Jain’s GST & VR 441
    CA Om Prakash Jain s/o J.K.Jain, Jaipur
    Tel 9414300730

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April 2024