TMI BlogReversal of ITC as per Rule 42X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s XYZ has purchased land area 10000 mtr during April, 2018. It develop infrastructure on land like road, electric line, common wall, drainage line etc. Govt authority passed layout plan as saleable plotting land area of 6000 mtr (30 plots of 200 mtr each) and 4000 mtr land area for common infrastructure. During 2018-19 XYZ incurred 20.00 lacs on infrastructure and availed ITC Rs 3.60 lac. XYZ bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked 6 plots and get token money during 18-19 and but possession not provided. Infrastructure cost during FY 19-20 was 40.00 lacs plus ITC Rs 7.20 lacs. There are two component in inward supply, one is land (exempted) and another is infrastructure (taxable). And there are two component in outward supply one is land (exempted) and another is infrastructure (taxable). For the outward supply of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd we are using inward supply of land only and we are not availing any ITC on procurement of land and not paying any tax on sale of land. Wherever we were availing ITC on infrastructure development only. And using this ITC for selling of infrastructure development GST liability. Sale value of plotted land includes value of land and infrastructure both. As per para 2 of notification no 11/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST (Rate) value of land is to be deemed at one third of sale value. We collected 18% GST on 2/3 portion (infrastructure part) of sale and discharged GST liability through credit ledger. Question : Whether any liability to reversal of ITC arise during 18-19 due to Rule 42 of CGST R ule . If yes then how much? - Reply By Sadanand Bulbule - The Reply = Dear querist As per your under u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstanding, XYZ is the owner of land and does development of it as per the rules of Local Town Planning Authority. Hope you are aware that in terms of Sl No. 5 of the Third Schedule to the GST Act , the sale of LAND , whether undeveloped or developed is neither a supply of goods nor a service. Factual and legal position being so, where is the question pf levying tax on infrastructure devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oped by the land owner and claiming input tax thereon separately? Further there are no two independent transactions/supplies in your case, sale of land and supply of infrastructure services to the buyers. it is the integrated sale of land converted in the form of sites as a single transaction and, therefore, not liable to tax under the GST Act in terms of Sl.No. 5 of the Third Schedule. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Reply By Shilpi Jain - The Reply = While assessing the payment of tax on sale of plots if you are not separating the sale of land and the infra portion then the same cannot be done while assessing the ITC eligibility. Are you paying GST on infra devept? Is it not part of sale of plots? - Reply By KALLESHAMURTHY MURTHY - The Reply = Dear Sirs, CBIC has issued a clarification in a Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r bearing No. 177/09/2022 dated 3-08-2022 , the same is applicable for this case. Formation of sites and sales with infrastructure development on own land by the developer is an exempted supply and hence not liable to avail input tax. In case any other taxable supplies were there, the ITC availed has to be apportioned to the extent of exempted supply as required under rule 42 . In case, the tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s collected from the customers on the sale of sites, it would serve as the wrong collection of tax and regulated by sec. 76 . Under such circumstances, ITC is not allowable. In the case of ITC utilised for such output tax payable, ITC has to be reversed along with interest. I endorse Sir Bulbuleji for more information given. - Reversal of ITC as per Rule 42 - Query Started By: - Komal Agarw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Dated:- 20-2-2024 Last Replied Date:- 28-2-2024 Goods and Services Tax - GST - Got 3 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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