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.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code