Itc calculation in REP Project

[NAMAN DOKANIA]

A builder develops a rep project in whch 50% residential and 50% is commercial after 01.04.2019. In residential the tax rate is 1% or 5% but in commercial the tax rate is 12%. how the ITC will be calculated for the commercial portion? How to claim in gst return? Pls xplain

[Shilpi Jain]

Every month any credit will have to be treated as common credit. Then on the basis of carpet area identify the portion of credit pertaining to residential and commercial.

That pertaining to residential completely reverse. That pertaining to commercial avail (assuming you are selling these units before completion). In case in commercial portion you are able to ascertain how many units you would be selling post completion, to that extent credit can be reversed every month.

Finally, on completion, the credit relating to the commercial portion can be re-worked based on the actual area sold after completion.

AI Summary

Calculating ITC for Mixed-Use Development: Allocate Monthly Credit by Area, Adjust for Post-Completion Sales, Recalculate Upon Completion. A builder is developing a project with 50% residential and 50% commercial units, subject to different GST rates: 1% or 5% for residential and 12% for commercial. The query concerns calculating Input Tax Credit (ITC) for the commercial portion. The response advises treating monthly credit as common, allocating it based on carpet area, reversing the residential credit, and availing the commercial credit if units are sold before completion. If some commercial units are sold post-completion, the credit should be adjusted monthly. Upon project completion, the commercial credit should be recalculated based on the actual area sold.