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tejinder sethi   13 June 2025

Gst on redevelopment

We are the owners of building have residential area of 6600 sft divided into 7 flats. The plot area is 560 sq meter and we are the plot owner which is in the name of our deceased father. We are three brothers each having one flat. The remaining 4 flats have been given to tenants on pagdi system. Now we are planning to go for redevelopment of the building wherein we shall get total 9000 sft out of the total area of 16000 sft which the developer will get after obtaining FSI. The tenants will be converted into owners of the area occupied by them. Now each brother will get 2000 sft that is double the existing area. The remaining area will be constructed and sold by the developer

The developer is asking us to bear the GST. Please advise if we have to bear the GST or the developer will have to absorb. The property is located in Mumbai.8)



 12 Replies

Dr. J C Vashista (Advocate )     13 June 2025

It is a mutual agreement between you and the developer.

It is better to consult a local or your own CA, if GST is compulsorily to be paid by you.

R.K Nanda (Advocate)     13 June 2025

Consult local tax lawyer. 

kavksatyanarayana (subregistrar/supdt.(retired))     13 June 2025

Yes.  It is a mutual agreement between you and the developer.  Amicably settle it, if necessary, consult a lawyer who knows taxes.

T. Kalaiselvan, Advocate (Advocate)     14 June 2025

In the case of redevelopment projects, the builder pays his entire GST liability on the gross amount he receives for selling the flats to an independent buyer.

Once this tax liability is discharged on the gross consideration received on the sale of such flats to the independent buyers, the GST demands on flats given to existing society members for free cannot be sustained.

Also, as per the judgment given by the tribunal in the case of Vasantha Green Projects (Supra), the tax demand raised by the Department was dropped and was held that the flats given for free to the members aren’t taxable. 

Moreover, the development rights being a benefit rising from the land must be held as immovable property and is outside the purview of GST. Therefore, given the specific provision of the sale of land and building, it isn’t applicable here. The key ingredient here in this contract is redevelopment. Hence, the members are not liable to GST even under this entry.

tejinder sethi   14 June 2025

Very nicely explained but I am attaching a recent explanation of GST on redevelopment. Could you please confirm if the GST is payable in our situation.


Attached File : 1041571 20250614192302 gst on redeveopment.pdf downloaded: 41 times

T. Kalaiselvan, Advocate (Advocate)     15 June 2025

You can discuss the issue that you are facing or can post the relevant portion of the information you rely upon but very briefly and not in an aelaborated manner as made in your attachment 

You may revert with brief details of the attached file which contains relevant provisions that you are looking for clarification and not the entire case history.

tejinder sethi   15 June 2025

Brief descripttion as below. Please ascertain if GST applicable in our situation.

Implications of the Ruling 

1. For Homeowners 

If you are redeveloping your property without selling TDR or FSI, you may not be liable to pay GST on the construction portion. 

The case establishes a distinction between compensation-based TDR transfers and service-based construction agreements. 

2. For Builders 

Builders in similar redevelopment deals may no longer need to pay GST under reverse charge, if no TDR is transferred. 

However, careful scrutiny of contract terms is essential, as each JDA is unique. 

Not a Blanket Exemption 

Experts warn that the ruling is case-specific and may not apply universally. If a development agreement includes TDR/FSI — particularly those issued by regulatory authorities under Maharashtra’s Unified Development Control and Promotion Regulations (UDCPR) — GST may still apply. 

 

Additionally, legal clarity from the CBIC or the Supreme Court is still awaited, especially given the pending litigations in other states like Telangana. 

T. Kalaiselvan, Advocate (Advocate)     17 June 2025

You have a clear answer to your original query posted in this thread.

Thus I think you are clarified about what you wanted to clarify here through the experts of this forum, because the contents of your latest post confirms and clarifies.

The builder is going to sell the portion of the property he acquired out of this redevelopment hence he is the one who is liable to pay the GST  and not the owners, because your portion of redeveloped property is not affected by TDR, whereas the builder is liable to pay because the TDR  is affected towards his share in the redeveloped property.

tejinder sethi   17 June 2025

Thanks sir for taking efforts to reply my query. Highly appreciated.

Dr. J C Vashista (Advocate )     18 June 2025

Very well analysed, opined, explained and advised by learned experts.

I fully agree and appreciate.

Nothing more to add. 

K.S.Ramaswamy Advocate (ADVOCATE)     01 July 2025

In my view untill or unless the complete agreement between you and the builder is read, the liability of gst could be discussed. It is better to consult a tax advocate with the details and then proceed and further you may also approach the GST Authority to assist you in this regard.

tejinder sethi   01 July 2025

The developer is saying he will not absorb as he has started receiving SCN for GST payment for earlier projects not paid. Also GST if paid by him the project becomes unviable for him. The matter is also pending in SC for final decision. We are in a dilemma as the GST amount is too high to absorb. 

What is your opinion sir in this situation.


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