Construction Contracts

 Construction Contracts


a. For Builders/Developers:

i. If the separate value of land is clearly mentioned in the agreement and if the same is higher than 33% of the total flat/unit sale value, the same can be claimed as deduction from the total value charged for the

flat/unit - Munjaal Manishbhai Bhatt vs. Union of India on 6 May 2022

ii. The balance value can be taken as 110% of the cost of construction services.

iii. TDR – RCM – 18% on commercial contracts

iv. RCM on non gst suffered goods if taxable purchase is less than 80%

v. 15% commercial construction allowed in residential flats

vi. 1% affordable constructions, 5% on residential – without input tax credit

vii. Joint venture agreement is key on deciding various aspects

viii. No tax on single residential unit construction

For flat/unit buyers:

i. On the lines of above points, flat buyers can discuss and negotiate with the builders while buying under construction flats/units

ii. Due care may be taken while drafting the agreements

iii. Possibility of lower stamp duties can be examined. Usually, either there is no stamp duty or lower stamp duty on the works contract agreements in most of the States

 

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