GST is a destination based tax upon the destination or consumption of goods or services. Further GST is also applicable on supply of goods and services related to moveable or immoveable property. There is a lack of clarity in respect of levy of GST on immovable property. Hence we will discuss the applicability of GST on immovable property in this article and also some other interconnected points. Applicability of GST on Immovable Property As per Schedule III in Section 7(2) (a) of the CGST Act 2017, sale of land and building is one such activity that is outside the purview of GST however, specific inclusion of one means exclusion of others. Therefore the scope of supply as per Section 7 related to immovable property is broad to include all other business services like renting, construction services etc., excluding sale of land and buildings. Therefore there are a lot of services that are related to immovable property and are exigible to GST. For example- any lease, tenancy, easement, license to occupy land, any lease or letting out of a building partly including a commercial, industrial or residential complex for business purpose or commerce, either wholly or partially and para 5 of Schedule II. Services related to immoveable property exigible under GST Renting immovable property and any lease, tenancy, license, and easement As per Section 7 (1), expression supply includes all forms of supply, including rental services for business purposes. According to para 5 of Schedule II of the CGST Act, renting of an immovable property as a business is liable to be taxed under GST at a rate of specified time to tie by GST council. Renting residential property used for residential dwelling will not be taxable and shall be excluded from the scope of supply. However, a residential complex sub-leased for the residential purpose is held to be taxable. The scope of supply extends to include sub-tenancy under para 2 of Schedule II. GST shall be applicable on tenancy premium received. In this, the tenant acquires tenancy rights in the property against the payment of tenancy premium. Service of Construction of real estate projects As per para 5 of Schedule II, construction services that is provided for constructing a complex or building to be sold to a buyer will be taxable, except where the whole consideration is received after completion certificate issuance, required by the competent authority or after its first occupation, that which is earlier. It specifies that only under-construction properties are taxable, and completed projects can't attract GST. Levy of GST is only possible when the buyer takes the service of construction and when the project has completed, service of construction can't be charged from the buyers. From 1st April 2019, new GST rates were applied on the promoters on construction of residential apartments. Projects beginning after this date will be required to pay GST as per new rates. What do you mean by Transfer of Development Rights? State governments, with a view to plan a city effectively, may acquire the land and, in return, provide compensation to the landowner. To overcome difficulties in the process, a scheme was introduced where Development Right Certificates was issued. With this, a landowner can sell the Development Right Certificates to a builder or developer or any person in return of consideration or jointly develop a building through the Joint Development Agreement. Development Right Certificates contains the right of additional built-up area in return of the area which the landowner relinquished. When the development rights are transferred to the developer, it is called Transfer of Development Rights. The authorities have provided different rulings where taxability of TDR hasn't been adjudicated thoroughly, and GST has been levied on TDR. Hence Transfer of Development Rights is a right of development related to immovable property which can be transferred and presumably fall under services and not under supply of goods. Conclusion It may be noted that as far as GST on immovable property is concerned, levy of GST can be done on flat maintenance charges on a housing society and other services as well. GST law has been left open ended in some cases, which has caused confusion amongst taxpayers. Therefore, there needs to be adequate rulings in this regard by the competent authorities and thereby fill the gaps that are left open. Read our article:Is it possible to avail ITC on GST paid for Construction of Immovable property?