• Purchase of flat - land owner's share

I am going to purchase a flat by bank loan which is land owner's share. The construction of the flat is almost 95% completed.We are preparing sale agreement. Now my doubt is about the applicability of GST. As I am purchasing it from the land owner as per sharing agreement and it will be delivered after completion so will there be any GST or registration duty? If yes what will be the rate? As far as my knowledge goes, on ready to move flat there is no GST for the buyer.Will it be applicable in my case? if yes how to execute the sale agreement ?
Asked 2 years ago in Taxation from Udaipur, Tripura

If you are going to buy a flat which is under construction from a builder who are selling flats then you have to pay the GST 18% as per the GST Norms. If the flat is ready to occupy then the builder might already paid the same where he will addon such GST cost with building cost in respective flat.

If you are buying a flat from Individual owner who are not a builder then you need not pay any GST but you have to pay the Registration charges applicable depends on the State Government and their norms.

Registration of deeds are done in the Sub-Registry offices as per Guide lines/instructions contain in Indian Stamp Act, 1899 with state amendments thereof, Registration Act, 1908, Tripura Registration Rules, 1954, Transfer of property Act, 1882, Indian Conveyancer and notification of govt. in revenue department on table of fees.

According to Tripura you have to pay 5% stamp duty.

Sivasubramanian B
Advocate, Chennai
47 Answers
2 Consultations

4.0 on 5.0

You must purchase the flat after construction is completed and OC is issued then no GST would be applicable

For purchase of under construction flats GST is applicable at 12 percent

Ajay Sethi
Advocate, Mumbai
69021 Answers
4153 Consultations

5.0 on 5.0

Before answering your question I want to know to answer from your side first flat is builder floor or apartment type and you booked you flat before July 2017 of after june 2017 and they will provide any completion certificate from authorirty or not.

Ranjeet Kumar Singh
Advocate, New Delhi
1 Answer

4.0 on 5.0

Since the construction of the flat is almost 95% completed ,it means the flat is near about ready to move , then you will have to pay less GST rather than under construction .

There will be no agreement for GST , there will apply registration duty.

Registration of deeds are done in the Sub-Registry offices as per Guide lines/instructions contain in Indian Stamp Act, 1899 with state amendments.In Tripura you have to pay 5% stamp duty.

Mohammed Shahzad
Advocate, Delhi
1063 Answers
19 Consultations

5.0 on 5.0

1) GST for on going project i.e. Under construction 12.5% where as ready to move nil.

Below is the example of Pre and Post GST.

At present the consumers in the real estate sector who opt to take an under construction property pay sales tax, value-added tax, stamp duty and registration charges to the builders. With the introduction of the GST Return, it is made clear that the indirect taxes, viz., sales tax and value-added tax will be replaced by GST. Whereas the developer or builder pays various elements of non-creditable tax costs like excise duty, customs duty, CST, entry tax, etc which are inbuilt in the pricing of the units. All these tax costs add upto anywhere between 22%-25% of the price of the units. Also, for the builder while procurement of goods and services, GST Return would be applicable. This GST Return would not be creditable and the developers would have to load this in the price of the property. Hence, there are chances for the increase in the pricing of the under-construction properties. For the projects which are under construction in different stages, the builder might have already purchased the raw material needed for the whole project. Which means the builder might have paid all the taxes which were supposed to be during the purchase. If the GST is implemented and if the builder is to claim the input credits, the cost of the unit might reduce to 20% of the value of the property. But, under GST, he can not get the credit of what he paid as consumer pays tax on taxes paid by the builder. Hence, the builder surely fits the price in the units. For example, if a builder wants to sell an under-construction property of Rs. 1000, the price of it is Rs. 1000 + service tax + VAT + stamp duty. With the implementation of GST, the price of it will be Rs. 1000 + GST + stamp duty. GST is beneficial in real estate sector, if the builder is benefited and if he passes on the same benefit to the customer.

Ganesh Kadam
Advocate, Pune
8251 Answers
69 Consultations

4.9 on 5.0

Ready-to-move apartments will have no GST but the developer will only get input credits on construction costs.

The GST on under-construction projects will be charged to home buyers on the sale price but the credit can be availed by the developers, only on the cost of construction. As the builder will have to pay the GST on the full project and the input availed is only on the construction cost, there may be a gap that is no less than 30 per cent. Consequently, whether you opt for an under-construction property or ready-to-move-in unit, the developer will hike the prices in that proportion, to make sure this gap is bridged.

Even when service tax was not applicable on ready-to-move-in properties, developers were escalating the price during possession. With the GST regime, buyers will not benefit, as the developers will escalate the prices due to GST compliances during the construction stage,

T Kalaiselvan
Advocate, Vellore
58863 Answers
745 Consultations

5.0 on 5.0

1. Well, even if you are purchasing it from landowner's share the developer would be aprty to the deed as a confirming party.

2. Since the landlower has not built the constructions and he is merely the land provider bypassing the builder you can not execute any deed of conveyance.

3. in that circumstances payment of GST becomes compulsory.

Devajyoti Barman
Advocate, Kolkata
18123 Answers
260 Consultations

5.0 on 5.0

1. GST is applicable at the rate of 12% for under construction flats.

2. Better purchase the flat only after the construction is complete and OC is granted as then GST will not be applicable/

Ashish Davessar
Advocate, Jaipur
26713 Answers
797 Consultations

5.0 on 5.0

It is 12% in case of under construction and as it is 95% complete and ready to occupy, it is out of GST purview.

Rajaganapathy Ganesan
Advocate, Chennai
1585 Answers
8 Consultations

4.9 on 5.0

Dear Sir/Mam

GST is applicable on the payments made to the builder during the construction of building under self financing scheme arrangement. However, GST is not payable on ready to move flats purchased from the builder or the owner of the flat as such same is exempt under the Goods and Service Tax Act.

At the same time, stamps duty is payable on the value of property as per governing rate applicable in the appropriate Sate laws.

Sachin Sharma
Advocate, Jammu
4 Answers

4.0 on 5.0

You are purchasing under construction flat

Hence you have to pay GST at 8 per cent

Ajay Sethi
Advocate, Mumbai
69021 Answers
4153 Consultations

5.0 on 5.0

There is no rate of tax schedule of 8%. As per GST Rate of tax schedules, the rate of tax on construction of building/complex being intended for sale to buyer by a builder in the furthrance of business of builder shall be charged @ 18% except where whole of consideration has been received by the builder after issuance of completion certificate.

In your case, as already informed that the flat is already 95% completed and in a ready to move position and further being purchased from owner, I am still of the opinion that GST is not applicable on said transaction for one of the primary reasons that the owner of flat is not selling the flat in the course and furtherance of his business.

In the sale deed you may get it incorporated that the flat is in a semi furnished condition though the structure is already completed.

Sachin Sharma
Advocate, Jammu
4 Answers

4.0 on 5.0

For under-construction homes that form a part of CLSS( Credit linked subsidy scheme) will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent. However, people who are not eligible for CLSS will continue to pay higher GST.

The concessional rate of GST of 12 percent (effective rate of 8 percent after deducting one-third of the amount charged for the house towards the cost of land) will henceforth (from January 25) be applicable for houses constructed or acquired under the CLSS for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban).

Under CLSS, the interest subsidy would be provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIGII) for acquisition or construction of house.

The sale agreement shall be entered into for the under construction flat only if the construction is not completed or a CC is not obtained.

T Kalaiselvan
Advocate, Vellore
58863 Answers
745 Consultations

5.0 on 5.0

It is the "Occupancy Certificate" which shall prove that the building is ready to occupy.

As per the recommendations of the council, for the housing sector, there will be less incidence of GST for homes purchased under the Credit Linked Subsidy Scheme (CLSS). For under-construction homes that form a part of CLSS will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent. However, people who are not eligible for CLSS will continue to pay higher GST.

Rajaganapathy Ganesan
Advocate, Chennai
1585 Answers
8 Consultations

4.9 on 5.0

1) you will come to know construction is completed by Municipal Corporation completion certificate.

2) If you are talking about new budget, but its yet to officially declare of reduce in GST prices.

Ganesh Kadam
Advocate, Pune
8251 Answers
69 Consultations

4.9 on 5.0

GST has to be paid to the builder

2) In its last meeting on January 18, 2018, the GST Council had extended the concessional rate of 12 per cent GST, for construction of houses under the Credit-Linked Subsidy Scheme (CLSS) to promote affordable housing, which has been given infrastructure status in 2017-18 Budget. The effective GST rate, however, comes down to eight per cent, after deducting one-third of the amount charged for the house/flat, towards land cost. This provision was effective from January 25, 2018.

Ajay Sethi
Advocate, Mumbai
69021 Answers
4153 Consultations

5.0 on 5.0

As per the recommendations of the council, for the housing sector, there will be less incidence of GST for homes purchased under the Credit Linked Subsidy Scheme (CLSS). For under-construction homes that form a part of CLSS will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent.

Cabinet has approved increase in carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG) under Pradhan Mantri Awas Yojana (PMAY).

Under PMAY, the area of the house is different for all categories and it's the carpet area and not the super area that is to be looked at.

Carpet area is the area enclosed within the walls i.e. actual area to lay the carpet. This area does not include the thickness of the inner walls. If you add up outer walls, balcony and other common areas, it's the built-up area.

As a result, the builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats.

If you have bought the owner's share and the owner had executed the registered sale deed, then the GST can be paid through the owner, let the builder give this demand in writing to which you can give a reply through your lawyer quoting the relevant rules.

T Kalaiselvan
Advocate, Vellore
58863 Answers
745 Consultations

5.0 on 5.0

To the builder you will have to pay the GST.

You will have to pay the GST @12% only.

Regards

Anilesh Tewari
Advocate, New Delhi
17268 Answers
267 Consultations

5.0 on 5.0

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