GST ON TDR PRIOR TO 01.04.2019

[NAMAN DOKANIA]

A Builder has taken land on development agreement basis on 01.04.2017. After 01.04.2019 amendment, the Builder has opted for Old rate only by filing Annexure 4.

Now, today the builder is handing over the flat to the landowner. What GST Rate shall be payable by the Builder on reverse charge on the same and what shall be the value of supply?

Please clarify

[Shilpi Jain]

There is lack of clarity in the transition cases how things need to be handled. The AARs all give rulings which would bring more revenue under GST.

In this case a view is that ST only should apply on the construction services. However, if one goes by the AARs, GST will have to be paid by the builder/developer.

This is not liable under RCM. It is liable under FCM in the builder's hands.

TDR in my view should not be liable under RCM. The Landowner will be liable, if any.

AI Summary

Reverse charge on development rights uncertain; builder may bear GST under forward charge instead per advisory views
For TDR arising from a development agreement predating 01.04.2019 where the builder retained old rates, transition uncertainty exists and some AARs widen GST liability. The advisory view is that the transaction should not attract the Reverse Charge Mechanism; instead the builder/developer is liable under Forward Charge Mechanism for GST on the supply, while TDR should not be treated under RCM and any landowner liability is contingent.