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I owned a plot of 10000 sq. ft. in the year 201...

I owned a plot of 10000 sq. ft. in the year 2012. In the same year, I entered into contract with Jethalal Builder and Sons. The terms were simple, they would build residential flats on my land, and I would give them 6000 sq. ft. of land, keeping the rest 4000 sq. ft. to myself.

The construction was finally completed in May, 2018 and the Certificate of Completion was issued for the flats.

But the builder says that I have to collect and deposit GST if I sell my proportion of flat to outsiders. But I have learned that after issue of Certificate of completion, the flats cease to be supply of goods of services hence outside the purview of GST.


I want to sell my share of the property. Should I pay GST to the Builder? Should I collect GST on sale of those flats owned by him from the buyer? Please advice.


I owned a plot of 10000 sq. ft. in the year 2012. In the same year, I entered into contract with Jethalal Builder and Sons. The terms were simple, they would build residential flats on my land, and I would give them 6000 sq. ft. of land, keeping the rest 4000 sq. ft. to myself.

The construction was finally completed in May, 2018 and the Certificate of Completion was issued for the flats.

But the builder says that I have to collect and deposit GST if I sell my proportion of flat to outsiders. But I have learned that after issue of Certificate of completion, the flats cease to be supply of goods of services hence outside the purview of GST.


I want to sell my share of the property. Should I pay GST to the Builder? Should I collect GST on sale of those flats owned by him from the buyer? Please advice.


0
Chiranjibi Jul. 03, 2018

There is no need of collecting GST from your buyers.

Clarification:

Your case seems to be of Transfer of Development Rights (TDR). And the case is straightforward, it used to be covered under service tax, before GST came along, but it is not covered by GST.

In your case, there has only been 'a supply of service' at one point. This happened in the year 2012, when you transferred your TDR to the builder, and thus the builder had to collect Service tax from you in the year 2012 itself. I am assuming he has already collected such Service tax from you.

Since the certificate of Completion has already been issued, the flats won't be considered as goods, and thus not under the purview of GST.

Secondly, unless you signed any agreement to pay the GST yourself (regarding the services provided by the builder to you, as stated above) you won't be liable to pay any taxes as such. If you were meant to pay, you should have paid it in 2012 itself.

This is because, in most cases, the builder undertakes to pay all the tax liabilities since it his duty to deposit it in due time, being the year of 2012.

As of now, there is no need to collect any tax from your buyers.

I owned a plot of 10000 sq. ft. in the year 2012. In the same year, I entered into contract with Jethalal Builder and Sons. The terms were simple, they would build residential flats on my land, and I would give them 6000 sq. ft. of land, keeping the rest 4000 sq. ft. to myself.

The construction was finally completed in May, 2018 and the Certificate of Completion was issued for the flats.

But the builder says that I have to collect and deposit GST if I sell my proportion of flat to outsiders. But I have learned that after issue of Certificate of completion, the flats cease to be supply of goods of services hence outside the purview of GST.


I want to sell my share of the property. Should I pay GST to the Builder? Should I collect GST on sale of those flats owned by him from the buyer? Please advice.


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