Supreme Court to decide on GST applicability to immovable property sale. Decision could impact real estate sector, with developers, buyers potentially liable to pay tax.
On August 17, 2023, the Supreme Court of India heard a significant case concerning the Goods and Services Tax (GST) – Chief Commissioner of Central Goods And Service Tax & Ors. v. M/s. Safari Retreats Private Limited & Ors. [Civil Appeal No. 2948/2023]. This case has sparked considerable interest due to its potential implications for the GST framework in India.
Background of the Case
The case revolves around the issue of GST credits related to immovable property1. The Additional Solicitor General (ASG) argued that the law denies credit when goods/services are used “on own account,” a term that is not clearly defined1. He also argued that immovable property (e.g., malls) is not subject to GST, and using credits from stages before property construction for rental services contradicts the GST framework1.
Key Arguments
The ASG cited the VKC Footsteps case and argued that credits cannot be granted solely based on economic rationale. He asserted that even in the pre-GST era, such credit claims were not allowed, and there’s no vested right to claim them.
Implications and Next Steps
The outcome of this case could have far-reaching implications for businesses dealing with immovable property and GST. The matter has been listed for further hearing on August 23, 2023.
This case serves as a reminder of the complexities involved in tax law and the importance of staying informed about ongoing legal developments. As we await the final decision, businesses and tax professionals across India will undoubtedly be watching closely.
Stay tuned for more updates on this landmark case!
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Always consult with a qualified legal professional for specific legal guidance.
Here are some frequently asked questions (FAQs) about “Immovable Property and GST”:
1. What is GST (Goods and Services Tax)?
GST is a comprehensive indirect tax levied on the supply of goods and services in India. It replaced various other indirect taxes like VAT, excise duty, and service tax.
2. Is GST applicable to immovable property transactions?
Yes, GST is applicable to certain transactions involving immovable property, such as the sale of under-construction properties and commercial renting.
3. Are there any exemptions for immovable property under GST?
Yes, residential properties that have received a Certificate of Completion are typically exempt from GST. However, there are certain conditions and exemptions that may apply.
4. When is GST applicable to under-construction properties?
GST is applicable to under-construction properties when the builder or developer sells the property before receiving a Certificate of Completion. In such cases, GST is levied at the applicable rate.
5. What is the GST rate for under-construction properties?
The GST rate for under-construction residential properties is typically 5% for normal properties and 1% for affordable housing. However, rates may vary, so it’s essential to check with the builder and the latest GST notifications.
6. Can I claim input tax credit (ITC) on GST paid for under-construction properties?
Yes, you can claim ITC on the GST paid for under-construction properties if the builder passes on the benefit of ITC to you and complies with GST regulations.
7. How is GST calculated on commercial property renting?
GST on commercial property renting is calculated based on the rent amount and the applicable GST rate, which is typically 18%.
8. Are there any GST exemptions for commercial property renting?
GST exemptions for commercial property renting are limited. However, some properties, like agricultural land, are exempt from GST.
9. Can I avail ITC for GST paid on commercial property renting?
Yes, you can generally avail ITC for GST paid on commercial property renting, provided you meet the necessary conditions and documentation requirements.
10. Is GST applicable to the sale of land without any construction on it?
– No, the sale of land without any construction is typically not subject to GST. It is considered a transaction in immovable property, which falls outside the scope of GST.
11. How should I ensure compliance with GST regulations when dealing with immovable property transactions?
– To ensure compliance, it’s advisable to consult with a qualified tax consultant or GST expert who can guide you through the specific rules and regulations related to your immovable property transaction.
12. Where can I find the latest updates and notifications regarding GST on immovable property?
– You can find the latest updates and notifications regarding GST on immovable property on the official website of the Goods and Services Tax Council or consult with a tax professional.
Please note that GST rules and rates may change over time, so it’s essential to verify the current regulations and rates with the relevant authorities or professionals before making any immovable property transactions.
