GST Charged by Supplier of TDR in Tax Invoice

[Kalpesh Shah]

Respected Seniors,

Facts of the Case :

My Client is a Builder/Developer. He has purchased TDR from LLP. This purchase of TDR transaction is Exempt for Transferor as per Notification No. 4/2019, dated : 29-3-2019.

On this Purchased TDR, Builder/Developer is liable to Pay RCM on unsold Residential units at the time of Occupancy Certificate.

While issuing Invoice for TDR, Transferor (LLP) has issued Tax Invoice and levied GST @ 18% and uploaded the same invoice on Portal in GSTR-1. Contention of TDR transferor is that he has generated TDR from Surrendering Land for Road Construction. Hence he is liable to Collect GST @ 18%.

Querry :

1. Is there any specific bifurcation in GST Law where GST on Transfer of TDR is liable @18% forward Charge ?

2. Will there be any liability under RCM on unsold units at the time of OC, since GST @18% is already collected by landowner and paid to Government ?

Thanking you in Advance

[Sofia chloe]

While issuing Invoice for TDR, Transferor (LLP) has issued Tax Invoice and levied GST @ 18% and uploaded the same invoice on Portal in GSTR-1. Contention of TDR transferor is that he has generated TDR from Surrendering  2048 cupcakes  Land for Road Construction. Hence he is liable to Collect GS  Who is liable to pay GST on TDR and floor space index? The promoter is liable to pay GST on a reverse charge basis on TDR or floor space index supplied on or after 

[Sadanand Bulbule]

Dear querist

In this regard, it is pertinent to refer the division bench judgement dated 09/02/2023 rendered by the Hon’ble High Court of Telangana in the case of Prahitha Constructions Pvt Ltd Vs. Union of India [WP No. 5493 of 2020] reported in 2024 (2) TMI 902 - TELANGANA HIGH COURT.

[Shilpi Jain]

The purchaser of the TDR would be using this to construct residential project?

If yes, then he is a promoter and required to pay GST under RCM.

[Kalpesh Shah]

Shilpi Madam,

Thank you for your reply.

Client will be utilising the TDR for Construction of Residential units only. 

But main question is that will he get any benefit of GST paid to supplier ? 

[KALLESHAMURTHY MURTHY K.N.]

In my opinion, the TDR provided by the LLP raises the tax invoice, so there is no need to pay tax again under RCM. The ITC on purchase of TDR can be availed proportionately to the extent of taxable development work on the area at floor space index as per clarification in Notification 4/2019 dated 29-03-2019. In other circumstances, tax paid under RCM on TDR, proportionate ITC to be reversed to the extent of exempted supplies determinable as clarified in the said Notification. There would be no loss to the developer/promotor for tax paid on TDR.

AI Summary

GST on TDR: supplier invoicing does not automatically eliminate promoter reverse charge liability when used for residential construction.
The core issue is whether GST on TDR is subject to forward charge when the transferor issues a tax invoice and whether the purchaser/promoter remains liable under reverse charge for unsold residential units at occupancy. Forum views diverge: one view requires the promoter to pay under RCM when TDR is used for residential construction; an alternative view accepts the transferor's tax invoice as forward charge, allowing proportionate input tax credit per government notification clarifications and necessitating ITC reversal to the extent of exempt supplies.