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

ITC reversal obligations for builders: bifurcate project costs and reverse credit when opting for no-input-credit tax treatment.
Developers required to adopt the lower-rate/no-ITC option for qualifying projects must reverse input tax credit if ITC was availed under a different rate. Departments may demand reversal, cash payment of tax under the no-ITC option on taxable turnover, and repayment to buyers of any excess tax collected. For mixed projects, allocate inputs and credits project-wise; where project-wise records are absent, apportion expenses on a reasonable basis (e.g., carpet area) and apply the reversal rules to compute attributable reversals and adjustments.