GST under RCM on Development Rights

[hubert fernandes]

GST ON DEVELOPMENT CHARGES

We are presently executing a project, of which we have received development rights from the land owner (Housing Society).

The Builder developer in said project constructing residential & commercial apartments, however commercial area does not exceed 15% of total carpet area of the project & hence project qualifies as RREP.

In lieu of Development Rights Builder Developers will allot certain numbers of Residential Apartments to the Land Owners (Housing society)

what will be Builders Developers liability on account of GST under RCM on transfer of Development rights vis a vis Notification 04/2019 – Central Tax (Rate) dt.29.03.2019.

AI Summary

Exploring GST Under Reverse Charge for Builder Developers: Residential vs. Commercial Units in Real Estate Projects A discussion on the Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM) for development rights in a project was initiated. The project involves constructing residential and commercial apartments, with the commercial area not exceeding 15% of the total carpet area, qualifying it as a Real Estate Residential Project (RREP). The main question was about the GST liability for builder developers when transferring development rights, as per Notification 04/2019. It was clarified that GST under RCM applies to residential units but not commercial ones. Input Tax Credit (ITC) is available for GST paid on development rights if units are sold before completion. However, there is no exemption for commercial units, and the valuation mechanism does not imply automatic exemption.