Developers receiving a one-time premium on allotment of commercial units of building will have to pay goods and services tax (GST) at 18%, the Gujarat Authority for Advance Ruling has said. Such a supply is taxable under Section 7 of the CGST Act, 2017, the AAR added.
The observation was made by the AAR while giving an advance ruling on an application by Ahmedabad-based developer Kedaram Trade Centre 15. Through his application, the developer wished to know whether the one-time premium received by it on allotment of completed building would be treated as taxable supply or not. He also wished to know what the applicable rate of tax will be in case the supply is treated as taxable supply under the GST.
See also: GST on real estate, flat purchase
The AAR also clarified that leasing of commercial property in lieu of a one-time premium or an annual premium would quality as “supply” as prescribed under Section 7(1) of the CGST Act.
The section says supply includes all forms of supply of goods or services or both, such as sale, transfer, barter, exchange, license, rental, lease, or disposal, made or agreed to be made for a consideration for business purposes.