AAR Verdict: No GST on Sale of Developed Land as per Schedule III

• Applicant Details :

- M/s. Vaishnaoi Infratech And Developers Private Limited filed an application for Advance Ruling under the GST Act.

• Interpretation of GST Acts :

- Provisions of the CGST Act and TGST Act are considered identical, and the term "GST Act" refers to both.

• Admission of Application :

- The application was accepted, as it met the requirements of Section 97 of the GST Act.

- The applicant paid a fee of Rs. 5,000 under SGST and Rs. 5,000 under CGST.

• Brief Facts of the Case :

- Vaishnaoi Infratech and Developers Private Limited is engaged in real estate development.

- The company owns 10 acres of land and has a joint development agreement for an additional 12 acres.

- The applicant sought an Advance Ruling on various aspects related to their business.

• Company Background :

- Vaishnaoi Infratech And Developers Private Limited is a private company engaged in construction and civil engineering.

• Questions Raised :

- The applicant sought clarification on several aspects, including the taxability of developed plot sales and development services.

• Personal Hearing :

- The authorized representatives attended a personal hearing and confirmed that their case is not pending in any other proceedings.

• Discussion & Findings :

a. Taxability of Developed Plot Sales :

- Sale of developed land is not subject to GST, whether it's sold as-is or after development.

b. Taxability of Development Services :

- Services related to the development of land are subject to GST.

- The applicable rate is 9% CGST and 9% SGST under a specific entry in the notification.

c. Taxability of Transfer of Development Rights (TDR) :

- TDR is taxable under GST, and the recipient (promoter) is liable to pay tax under the reverse charge mechanism.

- The rate is 9% CGST and 9% SGST.

d. Calculation of Value for Tax :

- The value of supply is determined based on the provisions of the CGST Act and CGST Rules, including the value of works contracts or Rule 30.

e. Input Tax Credit (ITC) :

- The developer can claim ITC while discharging the tax liability on development services and TDR received from registered landowners.

f. Time of Payment :

- The time of supply for TDR and development services is determined according to the CGST Act, based on invoice date or payment date.

• Rulings :

- Sale of developed plots is not taxable under GST.

- Development services are taxable at a rate of 9% CGST and 9% SGST.

- Transfer of Development Rights is taxable at 9% CGST and 9% SGST under reverse charge.

Geetha Agencies Vs. Deputy Commissioner of State Tax