GST Rate of tax on Advances received by Landlord share

[Ravikumar Doddi]

Dear sir,

Advances received by Landlord share from the prospective buyer, which construction would take place to complete in 2-4 years, Is GST Applicable, kindly enlighten with statutory provisions. Flats alloted in JDA on these flats only they are getting advances, kindly clarify

[Rajagopalan Ranganathan]

Sir,

Vide Sl. No.16 (iii) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended the rate of tax is 9% CGST and 9% SGST. Actually this rate is for Real Estate Service. In my opinion the same rate is applicable to advance received since no separate rate is prescribed for advance received and the advance received is towards sale of the flat/house.

[Shilpi Jain]

If it is an ongoing project and you have not applied to continue under the old scheme of rates of GST for the project i.e. 18% then the advances received would be liable at the effective rate of 5%. Receipt of advance would attract GST liability. However, if the amount received fromt he customer is as per the milestones mentioned in the agreement with the customer, the on receipt of money the lanlord will have to issue an invoice and not treat it as an advance.

AI Summary

GST on Advances for Flats Under Construction: 18% or 5%? Notification No. 11/2017-Central Tax (Rate) Explored A query was raised about the applicability of GST on advances received by a landlord from prospective buyers for flats under construction, expected to complete in 2-4 years. One response cited Notification No. 11/2017-Central Tax (Rate), suggesting a 9% CGST and 9% SGST rate for real estate services, applicable to advances as no separate rate exists. Another response noted that if the project is ongoing and not under the old GST rate scheme, advances would be taxed at 5%. It emphasized issuing an invoice upon receiving payments per agreement milestones, not treating them as advances.