Mum. redevelopment projects, 3 GST sees court cases build-up
Real Estate

Mum. redevelopment projects, 3 GST sees court cases build-up

The redevelopment of cooperative housing societies (CHS) in Mumbai is currently in full swing, but a complex web of issues related to the Goods and Services Tax (GST) within these redevelopment schemes is giving rise to legal disputes. In light of these challenges, appeals are being made to the finance ministry to streamline the tax mechanism and provide clarity for stakeholders.
In typical CHS redevelopment scenarios, members collectively transfer their development rights to a redeveloper. Upon completion of the project, they receive a new flat in exchange for their old one. The redeveloper, in turn, leverages the additional Floor Space Index (FSI) available under redevelopment regulations to construct additional flats for sale in the open market. This enables the builder to recover the cost of rehabilitation, offering new flats free of charge to the original members.
However, redevelopment projects face a triple GST impact, which not only adds to the overall project costs but also affects their viability. The first GST levy, set at 18%, is applied to the transfer of development rights to the builder (redeveloper). Importantly, this levy is contingent on the sale of flats post-acquisition of the project's completion certificate.
The intricate GST framework within redevelopment schemes has led to ambiguity and complications, causing concerns for both developers and housing society members. To address these challenges, stakeholders are urging the finance ministry to establish clear guidelines and a more streamlined tax mechanism that ensures fairness and clarity in these redevelopment projects.
As the redevelopment of cooperative housing societies continues to be a critical aspect of Mumbai's urban landscape, resolving GST-related issues is essential to ensure the sustainability and success of these vital projects.


The redevelopment of cooperative housing societies (CHS) in Mumbai is currently in full swing, but a complex web of issues related to the Goods and Services Tax (GST) within these redevelopment schemes is giving rise to legal disputes. In light of these challenges, appeals are being made to the finance ministry to streamline the tax mechanism and provide clarity for stakeholders.In typical CHS redevelopment scenarios, members collectively transfer their development rights to a redeveloper. Upon completion of the project, they receive a new flat in exchange for their old one. The redeveloper, in turn, leverages the additional Floor Space Index (FSI) available under redevelopment regulations to construct additional flats for sale in the open market. This enables the builder to recover the cost of rehabilitation, offering new flats free of charge to the original members.However, redevelopment projects face a triple GST impact, which not only adds to the overall project costs but also affects their viability. The first GST levy, set at 18%, is applied to the transfer of development rights to the builder (redeveloper). Importantly, this levy is contingent on the sale of flats post-acquisition of the project's completion certificate.The intricate GST framework within redevelopment schemes has led to ambiguity and complications, causing concerns for both developers and housing society members. To address these challenges, stakeholders are urging the finance ministry to establish clear guidelines and a more streamlined tax mechanism that ensures fairness and clarity in these redevelopment projects.As the redevelopment of cooperative housing societies continues to be a critical aspect of Mumbai's urban landscape, resolving GST-related issues is essential to ensure the sustainability and success of these vital projects.

Next Story
Infrastructure Transport

Indian Railways completes launch of world’s tallest railway pier bridge

In a major engineering milestone, Indian Railways has successfully completed the launching for all eight spans of the world’s tallest railway pier bridge on the Jiribam–Imphal railway line. The development was announced by Union Railway Minister Ashwini Vaishnaw via a post on social media platform X. The bridge, located in the Khongsang–Noney section of the Jiribam–Imphal Capital Connectivity Project, features a total of eight spans—comprising 1 x 71.5 metres, 5 x 106 metres, another 71.5 m span, and a 30 m span. The tallest pier of the bridge rises to a height of 141 m, making ..

Next Story
Infrastructure Urban

Enlight Metals brings AI efficiency to India's steel trade

Pune-based metal aggregator Enlight Metals is transforming the traditionally unorganised steel trading sector by embedding artificial intelligence (AI) across its operations. Faced with challenges like unpredictable demand, stockouts, and slow customer responses, the company has adopted AI-driven tools to streamline functions from inventory to customer engagement. By integrating AI with its CRM and ERP platforms, Enlight Metals has achieved a 40 per cent improvement in customer response time and a 25 per cent reduction in stockouts. The system prioritises customer queries from WhatsApp an..

Next Story
Infrastructure Urban

NMDC Drives Rural Transformation Through Education Initiatives

NMDC, India’s largest iron ore producer and a Navratna PSU, is quietly transforming rural India through its long-standing investment in education. With a total CSR contribution exceeding Rs 26 billion over the past two decades, NMDC has channelled more than Rs 6.9 billion into education initiatives alone, supporting over 1 lakh students annually in Chhattisgarh and Karnataka. “At NMDC, community development is a core part of our identity. By significantly increasing our CSR contribution in education year after year, we are educating not just an individual but a whole family, their gen..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?