Developed Plots Sales Will Attract GST
The sale of ‘developed plots’ with primary amenities is not equivalent to ‘sale of land’ and, accordingly, it will attract Goods & Services Tax (GST), the Authority for Advance Rulings (AAR) has said. This ruling is critical, as a listing in Schedule III of the CGST Act says that sale of land and sale of building will be treated neither as supply of goods nor as supply of services. However, the law terms as ‘supply of services’ the construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, by the competent authority or after its first occupation, whichever is earlier. Similar to sale of land, there is no GST on sale of building provided all payments have been made or completion certification issued. However, if the building is under constriction or there is no occupancy certificate, any transaction for such an asset will attract GST. GST rates for such transactions are 1 per cent and 5 per cent and assesses do not get input tax credit. The sellers charge the rates on a super built-up basis and not the actual measure of the plot. The super built-up area includes those used for common amenities, roads, water tank and other infrastructure on a proportionate basis — these are an intrinsic part of the plot allotted to the buyer. This indicates that sale of developed plot is not equivalent to sale of land but tantamount to rendering of service. Taking note of the Supreme Court expressing a similar view in a matter, the AAR said sale of developed plots will attract GST.
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