UP GST Dept Targets 500+ Builders Over FAR Transactions
The Uttar Pradesh GST department has issued notices to more than 500 real estate developers across cities including Lucknow, Noida, Agra, Kanpur, Aligarh, and Meerut, seeking detailed disclosures on Floor Area Ratio (FAR) purchases dating back to July 1, 2017.
The move stems from ongoing ambiguity over the applicability of 18% GST on the purchase of additional FAR—development rights typically bought from state authorities to allow construction beyond the permissible limit on a plot of land.
Why Builders Are Under the GST Scanner?
GST officials have asked developers to furnish comprehensive data on FAR transactions, including payment amounts, dates, and project locations. In Kanpur alone, over 50 developers have reportedly received individual notices. Authorities are reportedly probing whether these transactions attract GST and whether liabilities may be raised retroactively.
The enforcement action comes as the GST Council continues to deliberate the taxability of FAR purchases. If the council rules in favour of applying GST, developers may face hefty backdated demands along with interest and penalties. Legal experts caution that the implications could be severe, particularly for builders who acquired FAR between 2017 and 2025.
Wider Industry Ramifications
The crackdown isn’t limited to residential projects—non-residential constructions like hotels and private healthcare facilities are also under the scanner. Traditionally, GST, if any, on FAR was considered applicable after project completion. However, the recent notices demand disclosures even at the construction stage.
Builders have been given 30 days to respond, failing which they may face penal consequences. The move has caused unease in the real estate sector, with industry bodies urging the government to provide clarity on the matter and avoid retrospective taxation.
The issue is expected to figure prominently in upcoming GST Council meetings as developers await a final policy stance.
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
