Method to reverse ITC under rule 42 & 43 by a builder developer

[Rajesh Kumar]

Sir/ madam

Please share the simple method for the calculations of reversal of ITC by the builders and developers.
Second, let's a builder invoicing as

Value = 100

Discount =6%
now value = 94

Gst = 12%

now payable= 94*112%= 105

on objection by customers for charging 12% instead of 5%, he convinced that he is not collecting more amount from them as 100*105%= 105 also comes same.

he is dong this practice only to avail ITC as on charging 5% GST, ITC not available to him.

Is this practice is right ? Is ITC availabile to him?

AI Summary

Builder Seeks Guidance on Reversing Input Tax Credit Under GST Rules 42 and 43; Dispute Over 5% GST Rate Compliance A builder-developer seeks guidance on the method for reversing Input Tax Credit (ITC) under GST rules 42 and 43. The builder is invoicing at 12% GST to avail ITC, despite a 5% GST rate being mandatory for projects commenced after April 1, 2019. The builder argues that the total payable amount remains unchanged, but the department insists on reversing all ITC, paying 5% GST in cash, and refunding the excess tax collected from buyers. Experts suggest that if project-wise bifurcation isn't available, expenses should be reasonably allocated, possibly based on carpet area, to apply the reversal rules.