When JDA is executed?
GST implications on land owner
1. our firm took a land for development and constructing an apartment complex at 50:50 sharing of buiitup area ie 50 % for us (builder) and 50 % for the land owner; its in advanced stage of completion. 2. occupancy certificate from local body is yet to be obtained 3. NOW what are the GST/ income tax implications for the land owners in case they want to sell their share of Flats OR if they want to RETAIN also 4. right now we are remitting 5% GST on the sale proceedings of our share since occupancy certificate has not yet been issued. regards srinivasa rao
Asked 1 year ago in GST
- Development and Construction Phase: Since the construction of the apartment complex is in an advanced stage of completion and the occupancy certificate has not been obtained, the GST implications for both the builder (your firm) and the landowner need to be considered.
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Builder (Your Firm): You are remitting 5% GST on the sale proceeds of your share, which appears to be in line with the GST rates for under-construction properties. The GST rate for under-construction properties can vary, and it's advisable to ensure you're complying with the correct rate.
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Landowner: The landowner's share of the built-up area in the apartment complex could be considered as a supply of construction services, subject to GST. However, if the landowner intends to sell their share of flats, they would need to account for the GST implications at the time of sale.
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Occupancy Certificate and Sale of Flats: Once the occupancy certificate is obtained and the apartments are ready for occupancy, the GST implications may change. After the issuance of the occupancy certificate, the sale of flats is typically considered a supply of immovable property and may be exempt from GST, subject to certain conditions. This exemption would apply to both the builder and the landowner.
It's essential to verify the specific conditions and requirements for claiming this exemption under the GST laws in India.
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Income Tax Implications: The income tax implications for the landowners depend on whether they decide to sell their share of flats or retain them.
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Sale of Flats: If the landowners decide to sell their share of flats, they would likely incur capital gains tax. The tax treatment of capital gains depends on factors such as the holding period and whether the gain is short-term or long-term. Consulting a tax professional can help determine the exact tax liability and any available exemptions.
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Retention of Flats: If the landowners retain their share of flats and choose to occupy them, there may not be immediate income tax implications. However, the imputed rental income of the retained flats might be subject to taxation under the income tax law.
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Please feel free to ask any query .
The landowner's share of the built-up area in the apartment complex could be considered as a supply of construction services, subject to GST. sir can you please elaborateon this? OC not yet received . who is responsible for GST of owner share regards srinivasa rao
Asked 5 months ago
GST and Income Tax Implications for Land Owners in Joint Development Agreement
Background:
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Project Overview: 50:50 built-up area sharing between the builder and the landowner; OC not yet obtained.
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Current GST Compliance: Builder remitting 5% GST on their share's sale proceeds since OC is not yet issued.
GST Implications:
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Landowner's Share:
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Before OC: Treated as construction service; GST at 5% (without ITC) or 12% (with ITC) applies. -
After OC: No GST on sale of completed flats.
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GST Responsibility:
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Before OC: Landowner must charge and remit GST on sales. -
After OC: No GST on retained or sold flats.
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Income Tax Implications:
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Sale of Flats:
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Capital Gains: Taxed based on land and construction cost. -
Business Income: If applicable, taxed accordingly.
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Retained Units:
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Notional Rent: Taxable if retained for personal use; rental income if rented out.
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Steps to Ensure Compliance:
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GST Compliance: Proper invoicing and GST remittance for pre-OC sales. -
Income Tax Compliance: Accurate calculation of capital gains or business income. -
Professional Consultation: Seek advice from a CA to ensure compliance with GST and income tax laws.
By following these guidelines, the landowner can manage the sale or retention of their flats in compliance with GST and income tax regulations.
For detailed, personalized advice, consider a phone consultancy.
Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.
Thank you.
Shubham Goyal
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