Detail analysis of GST on Developed Plot by CA Umesh Sharma

Detail analysis of GST on Developed Plot by CA Umesh Sharma

#gst #gstonproperty #PlotDeveloped

Immovable property covers all types of lands; open lands; grounds; open spaces; plot. Accordingly, its sale is covered under Schedule III clause 5 i.e. sale of land and the same is exempt.

Immovable property also covers buildings. Accordingly, in case of work in progress, its sale is covered under Schedule III clause 5(b) and the same is taxable under GST. However, sale of building after occupancy certificate will be exempt under schedule III clause 5.

In case of sale of plot, the land converted into plot. There is no change of form. Hence, the same is exempted.

Let us understand and find answer to some of the transactions –
1. Landlord on his own account develops plot and sale to customer. Whether sale of developed plot is taxable under GST?
Land is converted into plots through development works. The form of land is not changed. Before occupancy certificate it was land and after occupancy certificate it is plot. Both the forms are covered within the definition of land. Thus, no GST is chargeable.
However, it is important to note that AAR has taken different views on the same and has treated it as building covered under Schedule II clause 5(b).
2. Landlord on his own account develops plot and sale to customer. Whether sale of developed plot is taxable after occupancy certificate?
After completion certificate it is not taxable as per Schedule III clause 5. As it is land, it is accordingly covered under 1st part of clause 5 and hence not taxable.
3. What is the implication of ITC on sale of plot?
If GST is paid under Schedule II clause 5(b), ITC will be available till occupancy certificate. However, if GST is not paid, ITC will not be available.
4. Landlord enters into JDA with developer and sale of plot to customer. Whether transfer of development rights for development of plot as per JDA from landlord to developer is taxable?
According to GST treatment of TDR, FSI, it can be said that transfer of development rights is taxable. However, the same is debatable.

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