“A”, real estate company enters into agreement with land owner for purchase of land for ₹ 50L and pays advance of say 30 Lacs. Shortly the company finds a buyer for 60 lacs.
Sale deed is directly executed by the land owner to actual buyer with the with 'A' as consenting party for ₹ 60Lacs.
The buyer pays 20Lacs to land owner and 40 lacs to the real estate company.
My queries are
1. Is company liable for GST since what is transferred is not land per se, but only right in the land
2. If the company is liable for GST, is it on 60 lacs or on 10 lacs, being the margin money
3. For purpose of income tax, whether his turnover is 10lacs or 60 lacs
Real Estate Firm's GST Liability on Land Sale: Entire 60 Lakhs or Just 10 Lakh Margin? A real estate company, referred to as 'A,' entered into an agreement with a landowner to purchase land for 50 lakhs, paying an advance of 30 lakhs. Subsequently, 'A' found a buyer for 60 lakhs, with the sale deed executed directly between the landowner and the buyer, while 'A' acted as a consenting party. The buyer paid 20 lakhs to the landowner and 40 lakhs to 'A.' The queries raised were about the company's GST liability-whether it applies to the entire 60 lakhs or just the 10 lakh margin-and the turnover for income tax purposes. The response highlighted the need to clarify whether ownership or merely rights to use/develop the land are transferred, affecting GST applicability. (AI Summary)
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