GST ON UNDER CONSTRUCTION FLAT PURCHASED & SOLD BY BUILDER AS AN INVESTMENT

[Kalpesh Shah]

Respected Experts,

Your Opinion is required on following Querry.

Facts of the Case

My Client is a Partnership Firm and their Nature of Business is Builders & Developers.

They want to Purchase an Under construction Residential Unit (1 Unit) by Paying Applicable GST.

If they resale this Residential Unit before receiving Occupancy Certificate, then what will be Rate of GST Applicable to them ? Is it 18% or 12% (i.e. after allowing 1/3rd Deduction for Land Component in the unit Value) ?

Is GST paid at the time of Purchase of this unit will be allowed as ITC ?

AI Summary

Partnership Firm Queries GST Rate and ITC Eligibility for Reselling Under-Construction Residential Unit; Experts Confirm 12% Rate A partnership firm involved in building and development seeks advice on the Goods and Services Tax (GST) implications for purchasing and reselling an under-construction residential unit. The firm queries whether the GST rate applicable on resale before obtaining an occupancy certificate is 18% or 12%, considering a 1/3rd deduction for the land component. Additionally, they inquire if the GST paid at purchase qualifies as Input Tax Credit (ITC). Experts advise that the GST rate is 12%, and ITC is permissible under the Works Contract Scheme, not affected by Section 17(5) of the CGST Act. An investor's role does not alter these provisions.