Registration as a composite dealer ?
This query is : Resolved
21 June 2018
if an individual buy a plot of land and make construction on it and after completing the construction as a house, sell it. and his gross receipt during the year is less than 1 cr. can he apply for gst no. as composition dealer or he has to obtain gst no. as a normal person.
21 June 2018
if he treat as business we have to pay the GST as per the GST act
22 July 2025
In your case, if the individual is buying land, constructing a house, and selling it as a business activity, then the treatment of GST depends on the nature of the transaction and the specific provisions of the GST law.
Key Points:
Composition Scheme:
The GST Composition Scheme is available to small businesses whose aggregate turnover is less than ₹1 crore (₹75 lakhs in special category states) in the preceding financial year.
Under the Composition Scheme, businesses pay tax at a reduced rate but are restricted from availing input tax credit (ITC) on purchases.
GST on Real Estate Transactions:
As per the GST Act, sale of land or a completed building is exempt from GST.
However, if the individual is constructing the property, it is considered as providing a construction service, and GST applies to construction services if the individual is considered as a builder or developer.
Eligibility for Composition Scheme:
The Composition Scheme cannot be availed by an individual involved in the sale of immovable property as real estate transactions are exempt from GST (sale of completed buildings/plots).
For an individual engaged in construction (builder/developer) and selling a completed property, GST may apply to the construction services, but composition scheme would not be applicable in this case.
Taxability of Construction Services:
GST is applicable to construction services under reverse charge if the buyer is a non-individual (business or developer), or if the property is under construction (not ready to move).
GST on construction services is at 12% (with input tax credit) under GST law.
Implication of Selling a Ready-to-Move Property:
Sale of ready-to-move property (after completion) is exempt from GST, as per Section 7 of the CGST Act.
However, if the person is a builder or developer, the construction service (sale of under-construction property) will attract GST.
Conclusion:
If the individual is selling ready-to-move property, GST is not applicable on that transaction.
GST registration as a composition dealer is not possible for real estate developers (builders) because they are involved in the sale of immovable property (exempt from GST).
If the individual is in the business of construction and selling under-construction property, then GST is applicable, and the individual must register as a normal taxpayer, not as a composition dealer.
In summary, for the sale of ready-to-move property, no GST is applicable, and composition scheme cannot be availed by an individual engaged in construction. However, if the individual is constructing the house and selling it before completion, the person must register as a normal GST taxpayer.
Key Points:
Composition Scheme:
The GST Composition Scheme is available to small businesses whose aggregate turnover is less than ₹1 crore (₹75 lakhs in special category states) in the preceding financial year.
Under the Composition Scheme, businesses pay tax at a reduced rate but are restricted from availing input tax credit (ITC) on purchases.
GST on Real Estate Transactions:
As per the GST Act, sale of land or a completed building is exempt from GST.
However, if the individual is constructing the property, it is considered as providing a construction service, and GST applies to construction services if the individual is considered as a builder or developer.
Eligibility for Composition Scheme:
The Composition Scheme cannot be availed by an individual involved in the sale of immovable property as real estate transactions are exempt from GST (sale of completed buildings/plots).
For an individual engaged in construction (builder/developer) and selling a completed property, GST may apply to the construction services, but composition scheme would not be applicable in this case.
Taxability of Construction Services:
GST is applicable to construction services under reverse charge if the buyer is a non-individual (business or developer), or if the property is under construction (not ready to move).
GST on construction services is at 12% (with input tax credit) under GST law.
Implication of Selling a Ready-to-Move Property:
Sale of ready-to-move property (after completion) is exempt from GST, as per Section 7 of the CGST Act.
However, if the person is a builder or developer, the construction service (sale of under-construction property) will attract GST.
Conclusion:
If the individual is selling ready-to-move property, GST is not applicable on that transaction.
GST registration as a composition dealer is not possible for real estate developers (builders) because they are involved in the sale of immovable property (exempt from GST).
If the individual is in the business of construction and selling under-construction property, then GST is applicable, and the individual must register as a normal taxpayer, not as a composition dealer.
In summary, for the sale of ready-to-move property, no GST is applicable, and composition scheme cannot be availed by an individual engaged in construction. However, if the individual is constructing the house and selling it before completion, the person must register as a normal GST taxpayer.
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