GST Authorities Issue Notices to Developers Over Rs 35 Billion Claims
ECONOMY & POLICY

GST Authorities Issue Notices to Developers Over Rs 35 Billion Claims

Several property developers have reportedly received show-cause notices from the Goods and Services Tax (GST) authorities, questioning their claims for input tax credit (ITC) amounting to approximately Rs 35 billion, according to sources familiar with the matter.

These notices follow a Supreme Court ruling in October regarding Safari Retreats, which allowed commercial real estate companies to claim ITC on construction costs for rental buildings.

The GST authorities have sought the refund of ITC from the developers, arguing that the credits were wrongly claimed, and in some cases, they have blocked the credit claims altogether. A developer who received a notice mentioned that the notices were causing significant confusion among industry players.

The Supreme Court had upheld the constitutional validity of the relevant provisions while emphasizing that eligibility for ITC should be determined on a case-by-case basis, based on the "essentiality" and "functionality" tests. The Court also specified that two conditions must be met to avail tax credit: the property must either be leased out or sold before construction is complete, and it must qualify as "plant or machinery."

Authorities stated that credits claimed by real estate companies would be deemed eligible once it is conclusively established that they meet the functionality and essentiality tests outlined by the Supreme Court.

Many developers have already approached the court in response to these notices, claiming that tax officials are misusing the provision to block and deny ITC. Tax officials explained that they are carefully reviewing ITC claims to prevent potential misuse. Abhishek A. Rastogi, the founder of Rastogi Chambers, argued that a scientific and objective mechanism must be applied uniformly to determine eligibility, in order to avoid unjustly denying rightful credits.

He also pointed out that in certain cases, authorities are interpreting the Supreme Court's findings as applying only to the petitioners in the Safari Retreats case. He stated that this interpretation is flawed, as judicial precedents are binding and should be applied uniformly to all taxpayers in similar situations across the industry.

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

Several property developers have reportedly received show-cause notices from the Goods and Services Tax (GST) authorities, questioning their claims for input tax credit (ITC) amounting to approximately Rs 35 billion, according to sources familiar with the matter. These notices follow a Supreme Court ruling in October regarding Safari Retreats, which allowed commercial real estate companies to claim ITC on construction costs for rental buildings. The GST authorities have sought the refund of ITC from the developers, arguing that the credits were wrongly claimed, and in some cases, they have blocked the credit claims altogether. A developer who received a notice mentioned that the notices were causing significant confusion among industry players. The Supreme Court had upheld the constitutional validity of the relevant provisions while emphasizing that eligibility for ITC should be determined on a case-by-case basis, based on the essentiality and functionality tests. The Court also specified that two conditions must be met to avail tax credit: the property must either be leased out or sold before construction is complete, and it must qualify as plant or machinery. Authorities stated that credits claimed by real estate companies would be deemed eligible once it is conclusively established that they meet the functionality and essentiality tests outlined by the Supreme Court. Many developers have already approached the court in response to these notices, claiming that tax officials are misusing the provision to block and deny ITC. Tax officials explained that they are carefully reviewing ITC claims to prevent potential misuse. Abhishek A. Rastogi, the founder of Rastogi Chambers, argued that a scientific and objective mechanism must be applied uniformly to determine eligibility, in order to avoid unjustly denying rightful credits. He also pointed out that in certain cases, authorities are interpreting the Supreme Court's findings as applying only to the petitioners in the Safari Retreats case. He stated that this interpretation is flawed, as judicial precedents are binding and should be applied uniformly to all taxpayers in similar situations across the industry.

Next Story
Products

EUROBOND Expands NABL Accreditation to 51 Testing Parameters

EUROBOND, the flagship brand of Euro Panel Products, has expanded the National Accreditation Board for Testing and Calibration Laboratories (NABL) accreditation of its in-house laboratory from 16 to 51 mechanical and chemical testing parameters, making it the only Indian aluminium composite panel (ACP) manufacturer with accreditation covering such an extensive testing scope.The expanded accreditation enables the company to independently test coils, coatings, cores, aluminium composite panels (ACP) and metal composite panels (MCP) in accordance with international standards, including IS, ASTM, ..

Next Story
Real Estate

Dubai Property Sales Rise as Rental Activity Hits Record High

Dubai's real estate market recorded its highest-ever monthly rental activity in June, while property sales rose sharply in both value and volume, reflecting sustained demand across the emirate's residential and commercial sectors.According to a market analysis by fäm Properties based on DXBinteract data, 40,022 rental contracts were registered during the month, the highest monthly total on record. New rental contracts increased 48.6 per cent year on year to 19,245, while renewals rose 28.5 per cent to 20,777.Property sales reached 13,933 transactions worth AED33.2 billion in June, representin..

Next Story
Real Estate

Isprava Partners Courtside to Launch Luxury Padel Experience

Luxury home developer Isprava has partnered with Courtside, Mumbai's first padel social club, to launch The Isprava Court, integrating its design-led lifestyle proposition with one of the city's emerging sporting destinations.Located on the rooftop of Atria Mall in Worli, Courtside spans 20,000 sq ft and combines padel, wellness, hospitality and community experiences. Since opening in February 2026, the venue has positioned itself as a social hub for sports and lifestyle enthusiasts.The Isprava Court features curated brand elements, including bespoke court branding, branded nets, towels and ac..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement