How to report payments for builder in GSTR-1?

[Mohit Mrinal]

What is correct in GSTR-1 for real estate? Showing invoices at every stage of construction and reporting it in B2C or reporting all the payments as advances in table 11A.  Also, if it is reported as advances. What impact will it have in a rare case when an agreement is cancelled after 2 years. Can the refund voucher in this case be created even after 2 years and subsequently tax liability can be adjusted in next tax period? Or is there any time limit for issuing it as it’s for credit note. As per circular Circular No. 188/20/2022-GST dated 27th December, it does allow the buyer to claim for refund rather than the builder. So this might infer that  the credit notes timeline has expired in case of tax invoices issued. But what about when we report it as advances and not as tax invoices? Kindly advise in both the cases of tax invoice/ receipt voucher if both the cases applicable.

[Shilpi Jain]

As per law, tax invoice to be issued as per milestones in agreement. IN case of refund due to cancellation after time limit, builder should also be allowed to go for refund, but would be a time taking painful process.

Instead see if suitable clauses can be incorporated in the AOS for customer to go for refund.

Many in the industry disclose as advance in 11A and adjust on refund of advances. Could attract general penalty for not follwing procedure set out in the law.

[Mohit Mrinal]

Thanks for your Reply. i had one more query. where should the invoices for sale of residential flats/units/apartments be reported in GSTR-1 when that residential unit under construction is sold to a "registered" entity? B2B ( Table no. 4) or B2C others (Table no. 7). The buyer will obviously not entitled to ITC as the tax rate is 5%/1% without ITC. but is it mandatory for reporting in B2B? or it can be reported in B2C too? The buyer is aware of blocked ITC and does not insist on getting invoice with his GSTIN. i am just asking for the compliance from builders side. your response shall be of great help. kindly note it is residential unit and not commercial unit.

AI Summary

Builders must report payments by milestone invoices in GSTR-1; advances reporting risks penalties and credit issues under GST rules Payments to builders in GSTR-1 should be reported by issuing tax invoices according to construction milestones, with invoices reflected in B2C or as advances in Table 11A. Reporting as advances may lead to complications if an agreement is canceled after two years, as credit note issuance has a prescribed time limit, potentially preventing tax liability adjustments later. Circular guidance allows buyers to claim refunds rather than builders, implying expired credit note timelines for tax invoices. Reporting advances instead of invoices may attract penalties for non-compliance. For sales of residential units under construction to registered entities, despite the buyer being ineligible for input tax credit due to concessional rates, reporting in B2B (Table 4) is generally required for compliance, though some query if B2C reporting is permissible. Builders should adhere to legal procedures to avoid penalties and consider contractual clauses to manage refunds effectively.