Case study

(i) Peter visited a site of a builder to purchase a flat for his residential purpose. At the site, he examined ready-to-move (completed flats) as well as under-construction flats.

All the flats were not of same size.

(I) 2 BHK under-construction flats were to cost ₹ 45 lakhs or less (GST payable 1%)

(II) The bigger under-construction flats, (3 BHK or more) were to cost more than ₹ 45 lakhs (GST payable 3%)

(III) The completed, ready-to-move-in flats were available for purchase with GST exempted (GST 0%)

Using the above information, find GST on :

1. an under-construction flat with cost
(a) ₹ 40,20,000
(b) ₹ 79,32,000

2. a completed (ready-to-move-in) flat with cost ₹ 89,00,000

(ii) Peter decided to purchase an under-construction flat costing ₹ 96,84,000. After bargaining, the builder offered a discount of ₹ 4,50,000.

How much will Peter pay if he purchases that flat?

(i)

1. (a) An under-construction flat with cost ₹ 40,20,000.

Since ₹ 40,20,000 < ₹45 lakh

GST = 1%

GST = $\dfrac{1}{100} \times 40,20,000$ = ₹ 40,200.

Hence, GST on an under-construction flat with cost ₹ 40,20,000 is ₹ 40,200.

(b) An under-construction flat with cost ₹ 79,32,000.

Since ₹ 79,32,000 > ₹45 lakh

GST = 3%

GST = $\dfrac{3}{100} \times 79,32,000$ = ₹ 2,37,960.

Hence, GST on an under-construction flat with cost ₹ 79,32,000 is ₹ 2,37,960.

2. Completed flat cost = ₹ 89,00,000

Completed flats have GST = 0%

Hence, GST on completed flats with cost ₹ 89,00,000 = ₹ 0.

(ii) Cost of an under-construction flat = ₹ 96,84,000

Discount offered = ₹ 4,50,000

Price after discount = ₹ 96,84,000 - ₹ 4,50,000 = ₹ 92,34,000

Since ₹ 92,34,000 > ₹45 lakh

GST = 3%

GST = $\dfrac{3}{100} \times 92,34,000$ = ₹ 2,77,020.

Final amount to be paid = ₹ 92,34,000 + ₹ 2,77,020 = ₹ 95,11,020

Hence, final amount to be paid = ₹ 95,11,020.