The Uttar Pradesh GST department has issued notices to more than 500 real estate developers across cities including Lucknow, Agra, Kanpur, Aligarh, Noida, and Meerut. Authorities are demanding detailed information on the purchase of Floor Area Ratio (FAR) from development authorities dating back to July 1, 2017, due to uncertainty over whether these transactions attract the standard 18% GST.
FCRF x CERT-In Roll Out National Cyber Crisis Management Course to Prepare India’s Digital Defenders
Why builders are under the GST scanner?
Floor Area Ratio or FAR is a development right that allows builders to construct more built-up area than the base land allows. Developers typically purchase additional FAR from government development authorities. However, it remains unclear whether such transactions are taxable under GST.
Uttar Pradesh GST officials have asked builders for full details of their FAR purchases, including transaction dates, amounts paid, and project locations. Among those receiving notices, over 50 developers in Kanpur were specifically named for seeking clarification ().
This unprecedented move comes while the GST Council debates whether FAR purchases should be taxed. Industry experts warn that if the tax is applied retroactively, builders who purchased FAR between 2017 and 2025 might face significant liabilities—including repayment demands and penalties ().
Algoritha: The Most Trusted Name in BFSI Investigations and DFIR Services
Broader Impact on the real estate sector
Non-residential projects such as hotels and private hospitals have also come under scrutiny. While the tax on FAR is conventionally due after project completion, GST notices now demand disclosure even during construction. The move has sparked concern within the real estate industry.
The notices require builders to respond within 30 days. Developers risk facing penalties and interest if they fail to comply or provide full details.
About the Author – Anirudh Mittal is a B.Sc. LL.B. (Hons.) student at National Forensic Sciences University, Gandhinagar, with a keen interest in corporate law and tech-driven legal change.