Reversal of ITC

[Rajesh Kumar]

Sir/madam

If a builder sales his flats before OC and after OC and also Sales developed plots. In GSTR 3B, the figures of sale of plot shows as exempted supply. Then is he required to reverse ITC proportionate to the exempted supply of sale of plots as per Rule 42/43 ?

[Shilpi Jain]

As per section 17(3) of the CGST Act, 2017, the value of sale of land will be part of value of exempt supply for the purposes of ITC reversal.

[Shilpi Jain]

In GSTR 3B sale of land should be shown as non-GST supply and not exempt supply

[Rajesh Kumar]

Is ITC to be reversed on proportional to the value of sale of plots as per rule 42 ?

[CA Hemanth Kumar]

Yes only common credit pertaing to sale of plots we need to do ITC reversal under rule 42

[KASTURI SETHI]

I support the views of both experts.

AI Summary

Input tax credit reversal required proportionate to sale of land and plots shown as non GST supply under rule based apportionment guidance.
Sale of land and plots is treated as part of exempt or non GST supplies for the purpose of input tax credit reversal. Common input tax credit attributable to such land or plot sales must be proportionately apportioned and reversed under the rule based apportionment mechanism applicable to ITC reversal, with land sales reported as non GST supplies in returns while the proportional reversal is effected for the exempted portion.