Taxmen want realtors to pay GST on common parking | Economic Times

Mumbai: The intelligence arm of the indirect tax department is investigating real estate developers in Greater Mumbai for not paying Goods and Services Tax (GST) on construction of common parking plots.Investigations by the Directorate General of GST Intelligence showed that several developers had constructed common parking plots and earned money from it, but did not pay indirect tax on the sales.The tax department has slapped notices to several developers in the last one week in this regard.The DGGI has also reached out to the state authorities to furnish details of contracts given to developers, and the money paid to them.Tax experts say that often such activities by the realty developers were considered to be outside the purview of indirect tax.“This activity is sort of a social responsibility activity for which generally no consideration is charged by the builders and hence service should not be subject to either service tax or GST,” said Abhishek A Rastogi, partner at Khaitan & Co. “No tax is applicable unless there is barter or the supply falls within the specified activities for which tax can be levied even in absence of consideration.”The tax department has also sent a list of about 50 real estate developers to Municipal Corporation of Greater Mumbai (MCGM) for some details.The DGGI said it is “presently pursuing an inquiry against some builders for non payment of service tax/GST on construction of public parking lots for MCGM”.The tax department would want the real estate developers to pay up GST, fine and interest that would run into crores of rupees, say industry trackers.This could also lead to litigation. “The possibility of going to the writ court should be explored at the very inception when the demand is raised after examining the absurdity on a case to case basis,” said Rastogi.This also comes at a time when the real estate sector is reeling under pressure. Real estate developers have seen a major impact due to the pandemic. Rental income and commercial real estate saw a downward spiral as companies allowed a substantial number of employees to work from home amid the pandemic and the lockdowns across India.