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

GST on assignment of flat rights: pre-completion assignments may attract tax; input tax credit use may be limited. GST is leviable on a pre-completion assignment of rights under a development agreement; the assignor may utilise input tax credit for tax already charged by the developer, but availability of such credit is subject to temporal restrictions; alternatively, completing the sale after grant of occupancy certificate may avoid GST treatment on the assignment.