Reversal of Input Tax Credit by a builder

[Deepak Bubna]

Friends :

Nature of business : Construction and sale of flats

The Credit availed during FY 18-19 and FY 19-20 is Rs. 1.5 Crores in Total

Completion Certificate received during October 2020

Proportion of Carpet area of units unsold as on the date of CC = 30%

Credit available from April 2020-October 2020 : Rs. Nil

Credit availed from April 2020 -October 2020 :0

In the given scenario above, what should be the amount of input tax credit that is required to be reversed, if at all. Reference to section/notification and judgments will be of great help.

AI Summary

Reversal of Input Tax Credit: builders must reverse proportionate ITC for exempt unsold carpet area upon project completion.
Compute common credit (C2) after attribution; calculate exempt attributable credit D1 = (E / F) x C2 using project specific carpet area E and F (E including exempt and unbooked apartments at completion); compute non business credit D2 = 5% of C2; determine eligible credit C3 = C2 - (D1 + D2); reverse the aggregate of D1 and D2 in FORM GSTR 3B or FORM GST DRC 03. Final calculation for each project is to be completed before the September return following the financial year in which the completion certificate or first occupation occurs.