GST for land cost claimable ?
Supply of land can either be in the form of goods or services as prescribed under para 2 of the First Schedule, GSTA.
Supply of Land as Supply of Goods
Para 2(1) the First Schedule, GSTA states that:
“In the case of land, any transfer of —
(a) the whole right of ownership in land;
(b) land under an agreement for the sale of the land;
(c) land under an agreement which expressly stipulates that the ownership of the land will pass at some time in the future;
(d) any interest under Deed of Assignment; or
(e) any strata title,
is a supply of goods”
Any supply made under para 2(1) includes any transfer of ownership in land by way of sale, gift, will etc. whether through an agreement or not and whether the ownership transfer immediately or in future. It also include transfer of strata title under a deed of assignment. All of the above transfers are supplies of goods whether or not the instrument of transfer is through memorandum of transfer or deed of assignment.
Supply of Land as Supply of Services
Para 2 (2) of the First Schedule of the GSTA provides that any lease, tenancy, easement, license to occupy land or transfer of undivided share in land is a supply of services.
Generally, any supply of land by making a grant of an interest in, right over or licence to occupy land in return for a payment or consideration is a supply of services. Such supply does not involved any transfer of ownership of the land/property.
The imposition of GST on land transaction will be based on its usage, either for residential or non-residential. Generally, any sale, lease or rent of non-residential land will be subjected to GST. The input tax incurred on the non-residential portion is fully recoverable by the registered person. Meanwhile, transactions involve on the land for sale, lease or rent used for residential, agricultural or general use is exempted from GST. The input tax incurred on the residential portion is non-recoverable by the supplier.