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

ITC apportionment: common credit must be allocated by carpet area and residential portion reversed, commercial portion availed.
Input tax credit must be treated as common credit and apportioned by carpet area between residential and commercial components. Credit attributable to residential units must be reversed in full; credit attributable to commercial units may be availed. If sales occur before completion, reverse credit monthly to the extent units will be sold for taxable commercial supply. On project completion, rework and reconcile the commercial portion of credit based on actual area sold.