Developer can Deduct One-Third of Total Amount towards the Value of Land or Undivided Share of Land Involved in Supply: AAR [Read Order]

The Kerala Authority for Advance Ruling has recently ruled in an application by Galaxy Homes Private Limited that developers can deduct one-third of total amount received for supply of constructed residential apartments after construction from the taxable amount as the deemed value of the land or undivided share of land involved in the supply.

It was observed that the provisions of Section 15 of the Central Goods and Services Tax (CGST) Act, 2017 read with Para 2 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 will apply for determining the taxable value of the services supplied for the period from 01.07.2017 onwards.

From the perusal of the provisions, it was found that “the total amount charged for the supply less the value of land or undivided share of land and the value of land or undivided share of land shall be deemed to be one-third of the total amount charged for the supply” and thus, “the value of land or undivided share of land is deemed to be one-third of the total amount charged for the supply irrespective of the actual value of land and accordingly the applicant is eligible to avail deduction of one-third of the total amount charged for the supply in arriving at the taxable value of the supply”.

“One-third of the total amount charged for the supply shall be deemed to be the value of land or

undivided share of land involved in the supply”, ruled the Authority comprising S. L. Sreeparvathy, IRS and Abraham Renn, IRS and the same were observed to be deductible from the total amount charged for the supply for the purpose of taxation under CGST Act.

To Read the full text of the Order CLICK HERE

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