Sale of Land - Basis of reporting in GSTR1 as exempted

[Balaji Srinivasamurthy]

Dear experts,

Section 15 of CGST Act states as below:

15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.

With the above being quoted, which value needs to be reported in GSTR-1 as 'exempted' - Guideline value or Market value for sale of land?

Regards

Balaji

[Balaji Srinivasamurthy]

I understand Sl.No.5 of Sch-III of CGST Act states as below:

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building

However, if the value of sale gets reported in 26AS/ AIS from the buyer in Income Tax, it becomes obligatory to the seller to report in GST, as well for matching both the revenues.

If this sale had to reported as exempted in this case, I have raised this query to understand on what basis it needs to be reported in GSTR-1 as exempted - guideline value (considered for stamp duty and registration fees) or market value (for which buyer compensates to the seller)

[KASTURI SETHI]

Dear Querist,

Who is liable to pay stamp duty ? Buyer or seller ?

[KASTURI SETHI]

The phrase, "the price actually paid or payable" signifies to past, present or future consideration against the SAME supply

[Balaji Srinivasamurthy]

Respected sir

Stamp duty usually will be paid by the buyer. My query is from the seller's perspective, whether he must report in his GSTR-1 and GSTR-3B.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

Guidance Value: This is the minimum price fixed by the state government for a particular locality that depends upon the type of property, whether residential, commercial or industrial properties, mainly intending to prevent undervaluation in the tax revenue.

Market Value (Actual Sale Price): This is the negotiated price between the buyer and seller, which is usually higher than the guidance value, reflecting real-time demand.

Further, the value also depends upon the calendar time as quoted by Sri Sethi Ji Sir.

The valuation of the property is based on the market value prevailing in a particular area where it cannot be ascertain the actual transaction value is from the records. Usually, sales are made by entering into an agreement. So the reporting value is the agreed amount or Market Value only.

[Balaji Srinivasamurthy]

Respected sir

Many thanks for your clarification on the amount to be declared, which is in fact, the agreed consideration.

However, we require your valuable opinion on the below scenario:

Sale consideration - 1,00,00,000/- (amount agreed between seller and buyer)

Guideline value - 1,10,00,000/-

In this case, is it Ok if the seller reports in his GSTR-1 for Rs.1,00,00,000/-, whereas the buyer deducts TDS on the guideline value @ 1% on Rs.1,10,00,000/- for Rs.1,10,000/-? There will be Rs.10,00,000 between the amount reported in Income Tax and GST

[Pinnacle Tax Advisor]

GSTR-1, outward supplies are required to be reported, whether taxable, exempt, NIL-rated, or non-GST supplies. However, the sale of land is neither a supply of goods nor a supply of services, as per Schedule III of the CGST Act. Therefore, it should not be reported in GSTR-1.

If such a transaction is incorrectly reported under "exempt supply," the authorities may issue a notice for reversal of Input Tax Credit (ITC) under Rule 42/43. Although this can be explained with supporting documentation, unnecessary or incorrect reporting should be avoided to prevent compliance issues.

[Balaji Srinivasamurthy]

Respected sir/madam,

I stay corrected. It is not exempted, however, since land sale is listed under Sch-III, is it correct if they are reported under "Non-GST supply" in Table 8 of GSTR-1 and Table 3.1.c in GSTR-3B (I wrongly mentioned as exempted supply in my previous message). My general objective and is query is to understand the right way to avoid any notice for the difference between sale values in Annual Information Statement as per Income Tax and Turnover as per GST (inclusive of all types of turnover - Taxable, NIL Rated, Exempted and Non-GST)

[KALLESHAMURTHY MURTHY K.N.]

Sir,

In my previous answer at Sl. No. 3 I suggested the reporting value is the agreement value on the premise that the agreed value is more than the guidance value.

The guidance value is considered to be the deemed sale price for the purpose of avoiding revenue leakage. Stamp duty and TDS would be calculated on the guidance value if the agreement value is less than the guidance value. However, for the purpose of the GST, the limit is 110% of the sale consideration, as mandated under Section 50C of the IT Act. This means if the stamp duty exceeds 110% of the consideration, then the stamp duty will be considered as the sale consideration. Hence, the GST value is to be based on the stamp duty value (SDV) and not the actual consideration.

In case the agreed value (subject to date of agreement and payment made on sale of property) is more than the SDV, when considering at 110%, then the transaction value is to be considered.

For example, consider SDV/Guidance value is Rs. 72 lakhs, and the agreed value is 66 lakhs. The 110% of 66 lakhs is 72.6. This is more than the SDV. In such a scenario, the reporting value is 66 lakhs.

In your example, 10000000-00 equals 11000000, then the reporting value is 10000000.

The above is my opinion as I understand the provisions.

[KASTURI SETHI]

Dear Querist,

Hotch-potch situation should be avoided. The query must be clear at the first attempt. A clear query saves the precious time of experts.

[KASTURI SETHI]

With reference to 4.1 above, Schedule-III is equal to Negative List of erstwhile Service Tax law. It is non-GST supply.

[KASTURI SETHI]

With reference to 2.1, since the buyer is liable to bear/pay stamp duty and registration fee, so these expenses cannot form the part of transaction value under CGST Act/SGST Act.

Only those expenses which are incurred by the buyer for and on behalf of the supplier (seller) are to be included in the transaction value. See Section 15(2)(b) of CGST Act.

[Shilpi Jain]

The value that has been realised on sale of the land is to be reported as exempt supply for GST purposes

AI Summary

Schedule III land sale treated as non-GST supply; reporting basis discussed for GSTR-1 and valuation. Sale of land is discussed as a Schedule III transaction and therefore a non-GST supply, not an exempt supply. The issue is whether it should be reported in GSTR-1 or GSTR-3B, and whether the reporting basis should be the guideline value or the actual agreed sale consideration. The discussion also notes that buyer-borne stamp duty and registration charges do not form part of the seller's transaction value, while expenses incurred by the buyer for and on behalf of the seller may be included.