GSTAT: No ITC Benefit Payable Where Entire Real Estate Project Falls Within GST Regime

April 2, 2026 : The Goods and Services Tax Appellate Tribunal (GSTAT), Principal Bench, New Delhi, has held that no input tax credit (ITC) benefit is required to be passed on to homebuyers where the entire real estate project right from booking to construction and payment has been executed wholly under the GST regime.

The ruling was delivered by Justice Mayank Kumar Jain (Judicial Member) in DG Anti Profiteering v. Sobha Limited (GSTAT Appeal No. 08 of 2025), wherein the Tribunal upheld the Director General of Anti-Profiteering’s (DGAP) closure report dated August 21, 2025 and found no violation of Section 171 of the Central Goods and Services Tax Act, 2017.

As reflected in the official order dated April 2, 2026, the Tribunal confirmed the DGAP’s findings and accepted the closure report, bringing the anti-profiteering proceedings to an end . The Tribunal also noted that the appeal stood confirmed and categorized the outcome as a “closure report” in its summary of order.

The proceedings arose from a complaint filed by homebuyers alleging that Sobha Limited had failed to pass on ITC benefits in its “International City” project in Gurugram by not reducing prices commensurately after the introduction of GST.

Upon investigation, the DGAP found that the ratio of credit availed to purchase value declined from 12.26% in the pre-GST period to 11.02% in the post-GST period, indicating a negative differential of 1.24%. This demonstrated that no additional ITC benefit accrued to the developer, and therefore, no benefit was required to be passed on to buyers .

Before the Tribunal, the developer argued that the entire transaction including booking (June 2019), execution of the builder-buyer agreement (July 2019), construction, and payment occurred after GST came into force on July 1, 2017. It was further submitted that pricing had already factored in ITC benefits available under GST.

The Tribunal accepted these submissions and clarified the scope of Section 171 of the CGST Act. It observed that anti-profiteering provisions are primarily attracted in situations involving tax rate reductions or incremental ITC benefits, particularly in projects spanning both pre-GST and post-GST phases. In contrast, where a project is entirely post-GST, there is no comparative baseline to assess any additional benefit.

Relying on the Delhi High Court’s judgment in Reckitt Benckiser India Pvt. Ltd. v. Union of India, the Tribunal reiterated that where both construction and supply occur entirely within the GST regime, pricing is presumed to have already accounted for ITC. Consequently, no separate obligation arises to pass on such benefit.

Importantly, the Tribunal clarified that the expression “constructed in the post-GST period” does not require that the unit be fully completed at the time of agreement. What is determinative is that the entire chain of activities from booking to completion occurs within the GST regime.

On facts, the Tribunal noted that all relevant stages application, agreement, construction, and payments took place post-GST, and these facts were not disputed by the complainants. It further held that the case squarely fell within the principles laid down by the Delhi High Court for fully post-GST projects.

Accordingly, the Tribunal concluded that no ITC benefit arose for passing on to homebuyers, upheld the DGAP’s closure report, rejected the complainants’ objections, and dismissed the proceedings.