AAR has said that if a real estate developer sells land with basic amenities as a plot, then GST will be imposed on it.
GST will be levied on the sale of plots with water pipeline, electricity and drainage facilities. The Advance Decision Authority (AAR) has said that if a real estate developer sells land with basic amenities as a plot, it will attract GST.
The AAR also said that the developed plot would come under the clause of 'construction of premises for sale to the buyer'. Under this, GST will be imposed on him. An applicant had applied before the Gujarat Bench of AAR to ask whether GST would have to be given on the sale of plots with primary facilities such as electricity, water, drainage and flat land.
In response to this, AAR said, "We believe that the developed plot will come under the section of 'Construction of premises for sale to the buyer'." In such a situation, GST will have to be given on this. The AAR issued this order stating that the applicant sells the developed plot. In addition to the cost of land in the sale price, the cost of primary facilities is also included on a proportional basis. This decision will have a direct, immediate and adverse effect on the entire real estate sector. This will eliminate the benefit of the tax neutral position on sale of developed plots. At such a time, such a decision may further exacerbate the recession in the real estate sector.
Plot sales will be affected
The slowdown caused by the coronavirus infection in the country is reducing the sale of houses and plots. If GST is levied on the sale of the plot, then the realty business may get further discouraged. According to the latest news, the sale of flats in the country has been badly affected. Their sales have fallen by 75 percent. Experts associated with real estate sector believe that there is no scope for this sector to accelerate for six months. Only if the government gives a big package to this sector, it will show speed.-Published by The Beyond News.