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?

[Ganeshan Kalyani]

Sir, the property is under construction , so the supply would attract GST.

[KASTURI SETHI]

I support the views of Sh.Ganeshan Kalyani Ji. GST is applicable on under construction property. Also Go through the decision of AAR Uttarakhand reported as 2020 (35) GSTL.510 (AAR -GST-UK) = 2020 (4) TMI 67 - AUTHORITY FOR ADVANCE RULING, UTTARAKHAND. Applicant : Rajiv Bansal and Sudarshan Mittal.

In addition to above, it is further opined that a perusal of para no.5 of Schedule-IIIalong withpara no.(b) of Schedule-II makes it clear that ready-to-move-in or completed property does not attract GST.

AI Summary

GST on under-construction property applies to mid-construction transfers; completed property is outside GST. Supply of an under construction flat attracts GST. Responses state that transfers during construction remain taxable and note that completed or ready to move in property does not attract GST under the interaction of Schedule II and Schedule III. The transactional question whether the developer must continue to account for GST on remaining installments or issue a credit note and recover tax from the new buyer is posed but not resolved in the replies.