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Published on:
February 20, 2023
By
Paramita

GST: Input Credit to Developers Selling Under Constructed Property

The Goods and Services Tax (GST) is a tax levied on the supply of goods and services. It was implemented in India on July 1, 2017. GST has subsumed many indirect taxes that were levied by the Central and State Governments. GST has simplified the tax structure in India and has made it easier for businesses to comply with tax regulations. However, there are still some grey areas in the GST legislation that are causing confusion among taxpayers. One such area is the input tax credit for developers selling under constructed property.

What is Input Tax Credit (ITC)?

Input tax credit (ITC) is the credit that a taxpayer gets for the tax paid on the inputs used in the production or supply of goods and services. ITC can be claimed by the recipient of the goods or services, provided that the tax invoice for the same has been properly maintained. ITC can be used by the taxpayer to reduce the GST liability on his outward supplies (i.e., sales).

ITC for Developers Selling Under Constructed Property

A developer who sells under constructed property is required to pay GST on the sale of the property. The developer can claim input tax credit for the GST paid on the inputs used in the construction of the property. The ITC can be claimed only after the developer has received the completion certificate for the property. The completion certificate is issued by the local authority after the property has been inspected and found to be in compliance with the building regulations.

However, there has been confusion among developers regarding the eligibility of ITC for under constructed property. The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification on this issue. According to the CBIC, ITC can be claimed by a developer for the GST paid on inputs used in the construction of under constructed property. The developer can claim ITC even if he has not received the completion certificate for the property. The only condition is that the developer should have paid the GST on the inputs used in the construction of the property.

Impact of ITC on Developers Selling Under Constructed Property

The availability of ITC for developers selling under constructed property is a relief for the developers. The ITC will reduce the cost of construction for the developer and will enable him to pass on the benefit to the buyers of the property. This will make under constructed property more affordable for the buyers. The ITC will also reduce the GST liability of the developer and will increase his profitability.

Conclusion

The availability of ITC for developers selling under constructed property is a positive step by the government. The ITC will reduce the cost of construction for the developer and will make under constructed property more affordable for the buyers. The developers should claim ITC for the GST paid on inputs used in the construction of under constructed property. This will reduce their GST liability and increase their profitability. The government should continue to simplify the GST legislation and issue clarifications on grey areas to reduce confusion among taxpayers.

Input tax credit (ITC) is the credit that a taxpayer gets for the tax paid on the inputs used in the production or supply of goods and services. ITC can be claimed by the recipient of the goods or services, provided that the tax invoice for the same has been properly maintained. A developer who sells under constructed property is required to pay GST on the sale of the property.FinanceTaxesgst-input-credit-to-developers-selling-under-constructed-property

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