Clarification required whether in Maharashtra Gst is leviable on Redevelopment only on +nal area recd or on total new area ie existing area plus additional area

[Kumar]

In Maharashtra in Redevelopment of flats whether GST is applicable on the value of  additional area recd or on the total value of the new flat (existing area of the flat owned +additional area recd ) Certain builders are demanding GST on the total area 

[Sadanand Bulbule]

 Plz refer the following:

Section 15 of the CGST Act, 2017 (Value of supply),

Notification No. 4/2018–Central Tax (Rate) dated 25.01.2018, read with

Notification No. 11/2017–Central Tax (Rate), as amended by Notification No. 3/2019–CT (Rate) dated 29.03.2019,.

The value of construction service provided by the developer to landowners or existing flat owners in a redevelopment project is limited to the value of additional area or other consideration received by them.

The construction corresponding to the old flat area is merely replacement of existing property and does not constitute a taxable supply, since there is no consideration for that portion.

Many Avance Rulings are issued on this issue.

[Narayan Pujar]

Hello Sir, Could you please let me know names of such Advance Rulings which confirm above understanding, Would be very helpful to go through the same and understand the interpretation

[Shilpi Jain]

In case of re-development, there is a consideration that the builder gets for the new construction and the work done for the existing area.

GST will be liable on the entire work done. If nothing is done in the existing area, then no supply w.r.t. existing area and hence no GST.

valuation is something you need to be very careful about, whether it would be as per the rule 27 or as per the valuation provided in the rate notification in note 2.

[Sadanand Bulbule]

2025 (6) TMI 577 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA - In Re: M/s. Sharda Vastu Nirmitee Private Limited

Levy of GST - area given free of cost to existing members under a redevelopment agreement - monetary considerations paid to existing members in terms of the development agreement - taxable value for levy of GST on the area given free of cost to existing members.

 

AI Summary

GST on redevelopment: tax applies only to additional area or monetary consideration, not reconstruction of original property In Maharashtra redevelopment disputes, GST is generally levied only on the value of additional area or other consideration received by landowners/flat owners, because reconstruction of the previously owned area is treated as replacement without fresh consideration and thus not a taxable supply. Some builders nevertheless demand GST on the total new flat area; valuation method can affect the taxable amount and requires careful application of valuation rules and rate notifications. Recent advance rulings from the Maharashtra authority have supported the view that taxable value is limited to additional/monetary consideration rather than the whole reconstructed area.