Under REP Project(100% Commercial) do developer require to pay GST(RCM) for area allotted to Tenants under barter system.

Though as per GST provisions recognise such transfer of development rights as a ‘barter,’ which is a taxable supply. This builder pays this levy at a later stage, it is paid at the time of first occupancy or receipt of the completion certificate. whichever is earlier.

However, The builder also incurs GST during the construction phase which according to the industry averages 18%, for which no input tax credit is available. For example, the GST paid by the builder on cement or steel cannot be offset later against its own GST liability.

Lastly, the GST incidence at 12% arises when the new office is transferred to the CHS members. “The developers are statutorily liable to pay this 12% levy.(RCM) But commercially, being an indirect tax, it depends on the negotiations between the parties on whether the GST burden will be passed on to the members or not. In most cases, as the members are getting new flats, they are not willing to bear it as per notification no.03/2019 dated 29/03/2019.

It was stressed that in redevelopment schemes, the GST department is charging GST on the market value of the flats given to existing CHS members free of cost, which is in lieu of their existing flats.

This effectively leads to double taxation as the cost of this rehabilitation component is already ingrained in the cost of flats being sold in the open market on which the developers are already collecting GST and discharging their liability.

Do Developer has to discharge RCM liability at theat the time of first occupancy or receipt of the completion certificate. whichever is earlier.

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