Gst on redevelopment

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.

Consult local tax lawyer. 

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

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.

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.

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.

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. 

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.

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

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

I fully agree and appreciate.

Nothing more to add. 

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.

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.