ITC reversal by a builder

[Rajesh Kumar]

Sir/ Madam

A builder develops two projects. One is about to complete and received completion certificate in February 2021. Second is 25% completed. In first project 25 flats out of 100 remained unsold. However, 15 flats out of 25 unsold flats were booked before CC but later on cancelled that's they are also unsold now. The builder is availing ITC from the stating of both projects. Now he has to reverse ITC against the sale of 25 flares which are to be sold after CC.

1. What will be the method/ mathematical calculation of ITC reversal against unsold flats ?

2. Was ITC to be reversed on monthly basis when builder was unknown about the number of unsold flats at the time of CC?

3. What was the right time of reversal to avoid interest there on ?

4. Is project wise inventory of raw material to be maintained?

5. Was the calculation of reversal to be made on project wise availed ITC ?

Please guide

thanks and regards

AI Summary

Builder Seeks Guidance on ITC Reversal for Unsold Flats; Rule 42 and 43 of CGST Rules, 2017 Advised A builder inquired about the reversal of Input Tax Credit (ITC) for unsold flats in two projects, one completed and one partially completed. The builder sought guidance on calculating ITC reversal, the timing for reversal to avoid interest, and whether project-wise inventory of raw materials should be maintained. Respondents advised referring to Rule 42 and 43 of the CGST Rules, 2017, and suggested project-wise calculations. It was noted that flats sold after receiving a completion certificate are exempt from GST. The importance of consulting an expert for specific guidance based on relevant documents and facts was emphasized.