GST on re - development

[Kaustubh Karandikar]

XYZ Co-Op Housing Society Limited has done Redevelopment Agreement with PQR (Developer). XYZ entered in – Redevelopment Agreement in July 2015, which was registered also. In Feb 2019 -Redevelopment was completed and Occupation Certificate was received. Now Developer is asking for GST for the NEW CARPET AREA @ CONSTRUCUTION COST @ 8% GST. Is the developer right in asking for GST?

[Alkesh Jani]

Sir,

I am of the view that once Occupation certificate or any other certificate issued by the competent authority (as it is different from state to state), it can be said that service is being completed and hence after the certificate no GST is liable.

Our experts may like to offer their comments.

Thanks

With Regards,

[Ganeshan Kalyani]

GST is applicable on milestone in construction service. If there is any payment made during GST era and the OC was also not received at the time of payment, then GST is applicable.

[KASTURI SETHI]

Dear Sir,

Will you mention some crucial terms and conditions of "Redevelopment Agreement" ? What do you mean by "redevelopment" here ? As per literal meaning, "there was already development of land" ? Then issue has to be examined in new perspective. There must be reason for asking for 8% GST by the developer ? Without going through the crucial clauses of the agreement, correct reply is not possible. Pl. revert.

AI Summary

GST applicability on redevelopment: liability hinges on completion certificate timing, payment milestones, and contract terms. Whether GST is payable on carpet area under a redevelopment agreement turns on completion timing and contract terms: issuance of an Occupation Certificate is argued to mark service completion and end further GST liability, while GST is also said to be chargeable on milestone payments made during the GST regime before such certificate; examination of the redevelopment agreement's clauses is necessary to resolve the developer's claim.