Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India
8. Re-development of Existing Land Structure
(i) 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, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service
Further, para 2 at the end of notification, provides for valuation of services in respect of the description herein above reads as under:
2. In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3 of the Table above, involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.
Explanation– For the purposes of paragraph 2, “total amount” means the sum total of, –
(a) consideration charged for aforesaid service; and
(b) amount charged for transfer of land or undivided share of land, as the case may be.
In case of redevelopment of the existing structure, fresh purchase of land is not involved. However, additional area of construction is carried out compared to earlier one. To carry out such a project, the builder developer must acquire the TDR, additional FSI and fungible FSI etc. on payment of premium to the corporation/from others in the
market. This is a huge expenditure to enable the developer to commercially exploit the potential of the plot of land. The plain reading of the para 2 of the Notification no. 11/2017-Central Tax (Rate), may not allow such deduction.
It is suggested that it be clarified that ‘land cost’ also includes amount spent to acquire the “interest in land” i.e. amount spent on redevelopment of existing land.
Related Topic on GST
|GST Acts||Central GST Act and States GST Acts|
|GST Rules||GST Rules|
|GST Forms||GST Forms|
|GST Rates||GST Rates|
|GST Notifications||GST Act Notifications|
|GST Circulars||GST Circulars|
|GST Judgments||GST Judgments|
|GST Press Release||GST Press Release|
|GST Books||Best Books on GST in India|
|GST Commentary||Topic wise Commentary on GST Act of India|
|GST You Tube Channel||TaxHeal You Tube Channel|
|GST Online Course||Join GST online Course|
|GST History||GST History and Background Material|