Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
Commercial real estate developers leasing properties are grappling with blocked credit eligibility notices under sections 17(5) C and 17(5) D, even as the issue is debated in the Supreme Court. Developers can claim credit when selling buildings before obtaining occupancy certificates but face restrictions if leasing. This discrepancy impacts India's appeal as a prime location for MNCs seeking office spaces. Experts urge a re-evaluation of the GST regime for leasing, emphasizing the need for equitable tax treatment. The industry keenly awaits the court's decision, hoping for a favourable outcome.
In a recent development, commercial real estate developers who lease their properties are facing challenges due to notices regarding blocked credit eligibility under sections 17(5) C and 17(5) D. This comes even as the matter is under deliberation at the Supreme Court, according to key figures within the real estate sector.
Advertisement
Developers who construct commercial buildings and sell them prior to obtaining an occupancy certificate can potentially claim credit, but only if they pay the output GST on the sale. However, this Input Tax Credit (ITC) is not available for offset if the building is used for leasing purposes.
A representation by CII reveals that construction costs usually make up 32% to 38% of the total project expenditure. With an 18% GST rate applicable to such services, the industry faces substantial costs due to the specific ITC restriction. The industry experts have pointed out an inconsistency in the tax treatment for property sales versus leasing. While both are methods to derive value from properties, their tax treatments differ, which contradicts the principles of equality. Builders argue that claiming credit is their inherent right, and any refusal disrupts the tax chain, contradicting the essence of the GST.
In conclusion, the ongoing debate surrounding the GST regime for the leasing sector has highlighted the need for a more comprehensive and equitable approach. The industry awaits the Supreme Court's decision, hoping for a resolution that supports the growth and sustainability of the commercial real estate sector in India.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
