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Credit Reversal for real estate project completed after 01st April 2019, Goods and Services Tax - GST

Issue Id: - 116939
Dated: 4-1-2021
By:- JIGAR SHAH
Credit Reversal for real estate project completed after 01st April 2019

  • Contents

Credit reversal for real estate project completed after 01st April 2019.

CASE:

The real estate project has been completed and the completion certificate received in July-2020 and the credit availed in relation to such project from 1st July 2017 to 30thJun 2020.

Whether the credit availed during the period starting from 1st July 2017 to 30thJun 2020 need to be considered for reversal purpose for the unsold flats or the credit availed during the period starting from 1st Apr 2019 to 30th Jun 2020 need to be considered for reversal purpose.

The present case is as follows:-

Carpet Area on the date of Completion (31/07/2020)

Carpet Area for Booked (Sold) Flats: 1800 Sq. Mtrs

Carpet Area for Unsold Flats : 1100 Sq. Mtrs

Total Carpet Area : 2900 Sq. Mtrs

Credit Availed in FY 2017-18 (Jul-17 to Mar-18) = ₹ 60 Lakhs

Credit Availed in FY 2018-19 = ₹ 33 Lakhs

Credit Availed in FY 2019-20 = ₹ 13 Lakhs

Credit Availed in FY 2020-21 (Apr-20 to Jun-20) = ₹ 1 Lakhs

Total Credit availed for the project (from Jul-2017 till completion) = ₹ 107 Lakhs

Completion certificate received in July-2020.

(Note: Continue with old rate compare to changes in rate for Real Estate project from 01.04.2019.)

Query:

The total amount of total credit to be reversed in GST for the above project which has been completed in July-2020 will be ₹ 107 Lakhs* 1100/2900 = ₹ 40.58 Lakhs comprising period starting from 01st July 2017 to 30th Jun 2020??

As per another opinion, the credit should be reversed for the period 01st April 2019 to 30th Jun 2020. In that case, the reversal amount will be ₹ 14 Lakhs*1100/2900 =₹ 5.31 Lakhs?

Which option is the correct one?

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1 Dated: 18-1-2021
By:- Shilpi Jain

Since the provision relating to credit reversal for entire project was introduced from 1.4.19, there is a possible view which can be taken that the credits availed prior to such date would be eligible if no exempt sales were made. only credits availed from 1.4.19 needto be considered.

However for sure the department would be of the view that the credit from 1.7.17 has to be considered fro reversal. So if this is not followed you could expect demand from department.


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