GST on sale of right in underconstructed flat by an agent

[NAMAN DOKANIA]

An agent, a Pvt Ltd company, does the business of purchase & sale of underconstructed flat. He gave advance for the underconstructed flat for say Rs. 80 lakhs, and after 10 months sold his right for Rs. 110 Lakhs. Will GST be leiveid under the same? if yes, then what will be HSN/SAC/Rate . If any provision/circular is quoted, that woudl be of much help, with explanation thereof.

AI Summary

GST on resale of under-construction flats by agents depends on broker status and Section 7(1)(a) CGST Act rules An agent, operating as a private limited company, purchased an under-construction flat and later sold the right to it at a higher price. The GST applicability depends on whether the agent is acting as a broker or trading on their own account. If merely a broker, GST at 18% applies on commission under SAC 9971. However, since the agent is trading the flat, GST is levied under Section 7(1)(a) of the CGST Act and relevant notifications, with no specific circular available, so an advance ruling is advisable. The transaction is taxable as the consideration is received before the issuance of the completion certificate, and it does not fall under Schedule II exclusion. If no sale agreement exists, GST may be payable on the margin; otherwise, GST at 5% on the entire sale value could apply. Input tax credit on GST paid to the builder may be questioned in this scenario.