GST ON CONSTRUCTION WORK IN PROGRESS SOLD TO ANOTHER FIRM

[Kalpesh Shah]

Respected Seniors,

My Querry is as follows :

Facts :

My client is a Partnership Firm having 4 Partners engaged in the business of Builders & Developers.

They have Started Construction of a Building and incurred expenses on Land, Labour, Material and other direct expenses. Project is affordable housing Project.

Now out of 4 Partners, 2 Partners are getting separated in between and taking over Land and Construction WIP on the date of Change in constitution by executing a Separate Agreements.

Query :

1. What will be the Rate of GST on Construction WIP Transferred ? Is it 18% or Some other rate being WIP of Affordable housing Project ?

2. What if they make Single Agreement of Take over of Land and Construction WIP, will Rate of GST Change ?

Need your Guidance on the above matter.

Thank you in Advance.

[Ganeshan Kalyani]

Serial no. 2 of Notification 12/2017-CTR dated 28.06.2017 states as , "Services by way of transfer of a going concern, as a whole or an independent part thereof. ". Refer this provision.

AI Summary

Transfer of going concern: characterisation of construction WIP transfer determines GST treatment and applicable rate. GST treatment of transfer of construction WIP on change in partnership constitution depends on whether the transfer qualifies as a transfer of a going concern. Serial no. 2 of Notification 12/2017-CTR refers to 'services by way of transfer of a going concern, as a whole or an independent part thereof,' and that characterisation will determine the GST treatment when land and/or WIP are taken over by departing partners, whether under separate agreements or a single agreement.