GST on sale of Flat

[Kaustubh Karandikar]

Mr. A has entered into the Agreement with the Developer, for purchasing the Flat for say ₹ 100 lac. The construction is underway. A has paid the sum of ₹ 70 lac so far and has paid Service tax, VAT and GST as the case may be, on the same. Now, before the construction getting completed, A is assigning his rights over the Flat to and in favour of B, with the consent of the Developer. The consideration amount for the transaction is ₹ 80 lac. The Developer is joining the Agreement as the confirming party. Rest of the consideration (Balance Amount) shall be paid by B to the Developer and shall also pay the GST becoming payable on the payment of the balance amount. The construction is still underway and the building has not been granted OC till date. In the mentioned perspective. A want to know, whether any GST would become payable on and in respect of the said Agreement for Assignment between A and B for ₹ 80 lac.

[Shilpi Jain]

Since the transaction between A and B is also happening before OC suggested to pay GST on this transaction by taking credit of the tax charged by the developer. In case the transaction between A and B is after 31.3.2019 then credit cannot be utilised by A.

Else A could consider selling after OC to avoid gst liability.

AI Summary

Purchaser Assigns Flat Rights Mid-Construction; GST Implications Analyzed for Assignment and Post-Occupancy Certificate Options A purchaser, A, entered into an agreement with a developer to buy a flat under construction for 100 lakh, paying 70 lakh so far, including applicable taxes. Before completion, A assigns the purchase rights to B for 80 lakh, with the developer's consent. B will pay the remaining amount and applicable GST. A seeks advice on whether GST is payable on this assignment. The response suggests paying GST on the transaction, utilizing tax credits from the developer. If the transaction occurs after March 31, 2019, credits cannot be used. Alternatively, selling after obtaining the Occupancy Certificate (OC) could avoid GST liability.