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Method to reverse ITC under rule 42 & 43 by a builder developer, Goods and Services Tax - GST

Issue Id: - 117512
Dated: 25-9-2021
By:- Rajesh Kumar
Method to reverse ITC under rule 42 & 43 by a builder developer

  • Contents

Sir/ madam

Please share the simple method for the calculations of reversal of ITC by the builders and developers.
Second, let's a builder invoicing as

Value = 100

Discount =6%
now value = 94

Gst = 12%

now payable= 94*112%= 105

on objection by customers for charging 12% instead of 5%, he convinced that he is not collecting more amount from them as 100*105%= 105 also comes same.

he is dong this practice only to avail ITC as on charging 5% GST, ITC not available to him.

Is this practice is right ? Is ITC availabile to him?

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Posts / Replies

Showing Replies 1 to 3 of 3 Records

1 Dated: 25-9-2021
By:- Rajagopalan Ranganathan

Sir,

It is the choice of the builder to pay tax @5% without ITC or @12% with ITC. The customer will pay the price of the building as quoted by the builder. While determining the price the builder will take into account the fact of availing ITC or not.


2 Dated: 26-9-2021
By:- Rajesh Kumar

Sir, as per provisions, if commencement of the project is after 01.04.2019, builder has to pay @5%, its mandatory. It's commencement is also after 01.04.2019. He is paying GST as per above calculations with ITC. Further he has submitted intimation to the department on 17.05.2019 but date was 10.05.2019. Is he have to reverse all ITC or any option to get relief?

Department is saying to

reverse all itc, pay @5% on taxable turnover in cash. Further also saying that he has collected more tax from the buyers , which required to return them I.e difference 12%-5%=7%


3 Dated: 28-9-2021
By:- Shilpi Jain

In case there is delay in filing the declaration department can dispute if input tax credit is availed. So you may end up paying the extra GST collected from customer to the department and also reverse the input tax credit that has been availed, unless you challenge the compulsion of adopting the lesser rate with no ITC option in the courts


1

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