GST on sale of flat by owner to third party mid construction

[Ashish Diwedi]

A buyer purchases flat in an under construction property for ₹ 1.5 crore. He pays 70% of the installments but thereafter decides to sell the same to a new customer. The Builder / developer has paid GST on 70% of the installments after recovering the same from buyer. In this case, the buyer enters into a tripartite agreement with the new customer where the builder is a confirming party. What shall be the GST implication thereafter?

Will the builder / developer continue to pay GST on balance 30% or will he issue credit note to the buyer and recover full GST from new customer?

Also will there be any GST implication to the buyer if he sells the flat to the new customer for ₹ 1.75 crore?

AI Summary

GST Query on Under-Construction Flat Sale: Tax Implications for Builder on Pending Payments and Credit Note Issuance A buyer purchased a flat in an under-construction property for 1.5 crore, paying 70% of installments before deciding to sell it to a new customer for 1.75 crore. The builder has already paid GST on the 70% installments. The query concerns whether the builder should continue paying GST on the remaining 30% or issue a credit note to the original buyer and recover full GST from the new customer. Responses indicate that GST applies to under-construction properties, referencing a decision by the Authority for Advance Ruling in Uttarakhand, which states that GST does not apply to completed properties.