No GST on Completed Real Estate

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By Legal Cell

 GST Act provided comprehensive definition on real estate and applicability of GST on real estate. The definition section of 2(25)(b) says that no tax to be levied on finished or completed projects. Accordingly, where Building Completion Certificate (BCC) is received there will be no such tax applicable. The section says:

a. In a welcome step, Section 2(25)(b) defining declared services of construction as “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 before its first occupation, whichever is earlier”

b. The above phrase i.e. before its first completion has been newly introduced vis­a­vis current definition of declared services under Service Tax. Since in Maharashtra, Works Contract Tax was merged with VAT and now VAT will be replaced by GST, tax experts are predicting that GST will be more burden on real estate development. Since buyers are not aware of taxation, builders are asking any amount to cover future taxation. The best deal is to have finished real estate with BCC to avoid such taxes. The definition has replaced Service Tax but silent on VAT charges hence it is presumed that there may not be any VAT now onwards after GST is applicable.

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