I am a developer, have joint agreement with land owner in ratio of 50%-50%, he owns 2 flats and i own two. Flats are built and i paid GST to contractor, i have ITC in my books but i cant collect GST on selling of flats, will Govt. refund me the ITC ? If Govt. doesnt refund, do i need to add to my cost the ITC amount which i paid ?
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what are the tax implications on my part and also from the land owner?
You cannot claim the the benefit of refund of the Input tax credit accumulated in your books of as paid for the services of the contractor you can avail of input credit, on all the goods and services purchased and spent in the construction of the property.
Further as developer you can collect the GSt from selling the flats to the buyer.
The land owner do not have any GST liability as he is receiving flats as consideration for land and hence shall be treated under shcedule III and no GST.
The flats are completed and if we sell now , it will not attract GST, Please see that into consideration. i have paid ITC but not allowed to collect GST, will i get refund or escalate the price to the prospective buyer to compensate by ITC. Can you please carefully answer again ?
Sir you can collect GST on sale of these flat from the buyers by adding to the selling price you have paid the contractor the amount with GST for just his construction service now same can be recovered from prospective buyer.
ITC WILL BE REFUNDED ONLY WHEN YOU SELL FOR CONSIDERTAION LESSTHAN THE COST.
What is the basis that you claim ITC from government, is it on the basis of paying GST to the contractor?
Why did you pay GST to contractor when you have already paid the ITC?
In any case you may file an application seeking refund of ITC, but there are less chances to get refund until and unless you prove the issue with substantial evidence
what are the tax implications on my part and also from the land owner?
You may have to pay the income tax for the income you have earned beyond the non-taxable limit;
The landowner may have to pay the long term capital gains taxes in addition.
Transfer of completed flats, property or ready-to-move-in property will not involve any service part to the buyer. Hence, GST will not be applicable in such transactions. Because it is neither supply of goods nor service.
The applicable GST rate for under construction flats, properties or commercial properties in land or undivided share of land is currently at 12% with full Input Tax Credit (ITC).
Under the situation since you cannot collect the GST and also you may not be able to get refund of ITC, you may have to escalate the price of th flat to cover the taxes you paid.