Service by way of transfer of development rights or Floor Space Index (FSI) on or after 1st April, 2019 for construction of residential apartments by a promoter in a project, intended for sale to a buyer, wholly or partly, where the entire consideration has been received before issuance of completion certificate or its first occupation, whichever is earlier is not chargeable to GST.
But promoter shall be liable to pay tax on reverse charge basis, on such proportion of value of development rights, or FSI or both, as is attributable to the residential apartments, which remain un-booked on the date of issuance of completion certificate or first occupation.
Time of GST Payment:-
Liability of GST on development right shall arise only after the project is completed and shall be paid under reverse charge by the promoter. No GST is required to be paid either at execution of the development agreement or during the course of development of the Project.
Value of supply:-
GST will be calculated on the value of transfer of development rights or FSI which shall be deemed to be equal to the value of similar apartments charged by the promoter from the independent buyers nearest to the date on which such development rights or FSI is transferred.
Rate: –
GST will be paid @18% on the value of development right. However such value is restricted only to the proportion of unsold area and such GST is further restricted upto 1% or 5% of the value of unsold stock as on the date of receipt of Occupation Certificate.
GST on supply of constructed area given to the Land Owner on or after 01/04/2019
As per the Notification No. 03/2019 dated 29/03/2019 GST on supply of constructed area given to the Land Owner in consideration of the development right is continues liable to GST.
Time of supply: –
As per the Notification No.06/2019 dated 29/03/2019 a promoter who receives development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash the liability to pay GST shall arise on the date of issuance of completion certificate or on its first occupation, whichever is earlier.
ITC to Land owner:-
landowner shall be eligible for credit of taxes charged from him by the developer towards the supply of construction of apartments by developer to him, provided the landowner further supplies such apartments to his buyers before issuance of completion certificate or first occupation, whichever is earlier, and pays tax on the same which is not less than the amount of tax charged from him on construction of such apartments by the developer.
Value of Supply: –
GST will be charged on total Amount charged for similar apartments in the project from the independent buyers, nearest to the date on which such development right or FSI (including additional FSI) is transferred to the promoter, less the value of transfer of land, if any.
Rate:-
GST will be paid @1% or 5% as the case may be.
Author Bio
I am a builder and have an developmet agreement with land owner on 2012 .the work is under construction ( fully residential) partly booked, whether GST on TDR is applicable ?
Since GST on development rights is paid on reverse charge basis by the builder is he liable to pay Kerala flood relief cess on it. Kerala Flood Relief Ces is payable on supply of goods or services to unregistered persons.
GST will be paid @18% on the value of development right is not there .
Only developer is going to pay tax on RCM if sold after completion.
But for construction service is it 18% to be charge by developer or 1% & 5%.
Thanks for valuable information on TDR… Good job sir