GST & Real Estate

Historically, whenever legislation has sought to limit the deduction for the subject matter (goods or services) on which tax is not to be levied, the Courts have struck down the provisions by stating that where the actual value is available, the law cannot restrict the deduction by putting a cap.

In a similar situation under GST, the Hon’ble Gujarat High Court in the case of Munjaal Manishbhai Bhatt held that capping the land deduction to 1/3rd of the total value, is not permissible when the actual value of land is available. Interestingly, such decisions of the Courts have led to retrospective amendments in the past, and it will be worth watching what happens under the GST law. This and more in Economic Laws Practice (ELP)’s Tax Partner Harsh Shah’s video on the impact of a recent GST litigation on the real estate sector.