ITC on goods sold by registered dealer to unregistered dealer

Here’s a clear explanation of the GST and ITC treatment in this scenario:

Situation Summary:

• Mr. A owns commercial land (unregistered under GST).

• Plans to construct a multi-storied complex.

• Mr. A will buy building materials from registered dealers, who charge GST on supply.

• Mr. A is unregistered, so he cannot claim Input Tax Credit (ITC).

• Sale deed value is not split into land and construction cost, but for stamp duty, valuation is based on type of shop/location.

Key GST Points:

1. Unregistered Person & ITC:
   Since Mr. A is not registered under GST, he cannot claim ITC on the GST paid on building materials. The GST paid becomes part of the cost of construction and cannot be separately claimed or refunded later.

2. GST Paid as Cost:
   The GST paid on input supplies by Mr. A will be included in the cost of construction of the complex for accounting and tax purposes.

3. No Refund Available:
   Only a registered person can claim ITC or refund of GST paid on inputs. Mr. A, being unregistered, is not eligible for refund of GST paid on materials.

4. Sale of Property:
   When Mr. A sells the constructed shops/complex, GST may apply to the sale of under-construction property (if applicable under GST law), but that's a separate issue.

5. Sale Deed Valuation:
   The lack of bifurcation in sale deed value (land vs construction) does not impact the GST paid on inputs by Mr. A; for stamp duty, the authorities will use their method as per local rules.

Summary:

If Mr. A wants to claim ITC in the future, he would need to register under GST (if turnover criteria met), but that usually applies to business activities and may not be practical for construction of own property.