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Author compiles recent changes in GST applicable wef 01.04.2019 related to builders and developers- It explains changes Where GST OF 1%/5% Is Opted For Ongoing Project, Where Existing 8% Is Continued With ITC, Impact on New Projects and amendment in rules regarding Input Tax Credit in summaried form.
Page Contents
A. WHERE GST OF 1%/5% IS OPTED FOR ONGOING PROJECT
| S. No. | Compliances / Amended Provisions |
| 1. | Builder can opt for, 1% GST for affordable housing and 5% GST for other residential project, without availing ITC |
| 2. | GST 1% / 5% is the effective rate after deducting 1/3rd towards value of land. |
| 3. | An Intimation in Annexure IV shall be submitted to the jurisdictional commissioner on or before 10.05.2019. |
| 4. | Invoice can be issued before submitting the intimation with the GST rate opted. |
| 5. | If the intimation is not given on or before 10.05.2019, it is presumed that the builder has opted for 1%GST / 5% GST without ITC. |
| 6. | GST 1% or 5% shall be paid in cash only. Balance in ITC cannot be used to pay this. |
| 7. | In case the carpet area of commercial premise in a residential project is not more than 15% of the total carpet area of the project, then the same shall be treated as residential project and eligible for concessional GST rate of 5% on the commercial premise also. |
| 8. | Builder opting for reduced GST rate of 1% / 5% shall reverse the ITC proportionate to the supply after 1st April as per the formula notified. |
| 9. | The reversal of ITC shall be done project-wise. |
| 10. | A project shall mean, a Real Estate Project (REP) or a Residential Real Estate Project (RREP) in which carpet area of commercial premise is not more than 15%, as per RERA. |
| 11. | Booking of apartment on or before 31.03.2019 means complying the following 3 conditions, namely;
a. Part of supply of construction service should happen. b. Part of consideration should be credited to bank account c. An allotment letter or any other document is to be issued confirming the booking. |
| 12. | Where it is opted for concessional rate of GST 1% / 5%, the 80% of the procurement of goods and service* should be from the registered supplier. |
| 13. | In the event, the above procurement* is less than 80% in a financial year, the GST at the rate of 18% shall be paid on shortfall under RCM. Such liability shall be added to the output liability of any month not later than June of the subsequent year. |
| 14. | *For the purpose of computing 80% Services by way of development right, FSI, Long term lease of land, Electricity, HSD, motor spirit and natural gas shall be excluded. |
| 15. | Where the above shortfall includes purchase of cement from un registered supplier, the GST rate shall be 28%. |
| 16. | Where the above shortfall includes purchase of capital goods, the GST rate shall be the rate applicable to such capital goods. |
| 17. | Where cement is procured from un-registered person, the GST under RCM shall be paid in the month in which cement is procured. |
| 18. | Project-wise account of inward supplies is to be maintained for supplies from registered suppliers and unregistered suppliers. The such details are to be electronically submitted in the portal before 30th of June of next year in the prescribed form. |
| 19. | Builder (developer) shall pay GST on flats sold to the land owner at the same rate. Time of supply shall be the receipt of completion certificate. The tax so paid shall be eligible for ITC if the land owner further sells the flats other buyers. |
| 20. | The ITC not availed shall be reported every month in form GSTR 3B [Row No. 4(D)(2)] |
| 21. | Where premises are not fully sold before the receipt of completion certificate, the builder shall pay GST at the rate applicable to the project on the development right, FSI, long term lease of land on value proportion to the premises unsold on the date of receipt of the completion certificate. The value of similar premises sold (minus 1/3rd towards land value) at the nearest point of time shall be considered for the valuation of unsold portion of the project. |
B. WHERE EXISTING 8% IS CONTINUED WITH ITC
| S. No. | Compliances / Amended Provisions |
| 1 | Builder can opt to continue the existing rate of 8% GST for affordable housing and 12% GST for other residential project, with ITC |
| 2 | An Intimation in Annexure IV shall be submitted to the jurisdictional commissioner on or before 10.05.2019. |
| 3 | Invoice can be issued before submitting the intimation with the GST rate opted. |
| 4 | If the intimation is not given on or before 10.05.2019, it is presumed that the builder has opted for 1%GST / 5% GST without ITC. |
| 5 | On going project means which meets all the following conditions, namely;
a. Commencement certificate in a project is issued and certificate from an architect/chartered engineer/licensed surveyor is obtained certifying that project has started on or before 31.03.2019 b. Where commencement certificate is not required, the certificate from an architect/chartered engineer/licensed surveyor is obtained certifying that project has started on or before 31.03.2019 [for (a) and (b) above, earthwork for site preparation for the project has been completed and excavation for foundation has started on or before 31.03.2019] c. Completion certificate has not been issued or first occupation of the project has not taken place on or before 31.03.2019 d. Booking has happened on or before 31.30.2019. |
| 6 | ITC is to be reversed every month on the basis of estimated sale after completion of the construction. |
C. NEW PROEJCTS
| S. No. | Compliances / Amended Provisions |
| 1 | All new residential project which is commenced on or after 01.04.2019 shall attract 1% GST for affordable residential apartment and 5% GST for other residential apartments without ITC. |
| 2 | Affordable Residential Apartment means residential apartments with carpet area not exceeding 60sqm in metropolitan cities or 90sqm in other places for which gross consideration does not exceeds Rs. 45 lakhs. |
| 3 | For computing this Rs. 45 lakhs, the consideration for the flat, amount separately charged for the land / lease rent if any and amount charged for preferential location, development charges, parking charges, common facilities charges etc shall include. |
| 4 | GST 1% or 5% shall be paid in cash only. Balance in ITC cannot be used to pay this. |
| 5 | In case the carpet area of commercial premise in a residential project is not more than 15% of the total carpet area of the project, then the same shall be treated as residential project and eligible for concessional GST rate of 5% on the commercial premise also. |
| 6 | A project shall mean, a Real Estate Project (REP) or a Residential Real Estate Project (RREP) in which carpet area of commercial premise is not more than 15%, as per RERA. |
| 7 | In case of commercial constructions, ITC is to be reversed every month on the basis of estimated sale after completion of the construction. |
D. AMENDMENT IN RULES REGARDING ITC
| S. No. | Compliances / Amended Provisions |
| 1 | In case of demerger, the ITC shall be apportioned in the ratio of value of entire assets of the business, whether or not input tax credit has been availed thereon. |
| 2 | In case of builders, the ITC exclusively attributable to taxable supply (T4) shall be zero since the inwards supplies are used for taxable supply (sale during construction) as well as sale after completion of construction. |
| 3 | ITC exclusively attributable to activities other than business (T1), ITC exclusively attributable to exempt supplies (T2), ITC restricted u/s 17(5) (T3) and ITC exclusively attributable to taxable supply (T4) shall be determined and declared at summary level in GSTR 3B. |
| 4 | In case of construction service (sale of under construction premise) apportionment of ITC under rule 42 shall be made every month project-wise. |
| 5 | The apportionment shall be made on the basis of estimated carpet area of flats which may be sold during construction and estimated carpet area which may be sold after completion. |
| 6 | The eligible credit shall be computed under rule 42 shall be computed separately for CGST, SGST, UTGST and IGST and declared in GSTR 3B or form GSTR DRC-03. |
| 7 | The final reversal of proportionate ITC shall be computed at the end of the project for the entire project from the commencement of the project or 1st July, 2017 whichever is later, to the completion of the project. This shall be done before filing the return for Sept following the end of the financial year in which the project is completed. If the eligible credit is more than the already availed, the differential credit shall be availed and if the eligible credit is less than the availed, then the excess credit taken shall be reversed along with interest from 1st April of the succeeding year till the date of payment. |
| 8 | Where any input or input services are used for more than one project, the ITC on the same shall be distributed to each project on a reasonable basis. |
| 9 | The eligible and ineligible credit on capital goods shall be declared in GSTR 3B |
| 10 | In case of construction service, ITC on capital goods shall be availed on proportionate basis as the capital goods are commonly used for the supply during the construction and sale after completion of construction. The computation of final eligible credit and reversal is similar to ITC on input and input services. |
| 11 | Where capital goods are used for more than one projects, the ITC on the same shall be apportioned to each project on a reasonable basis. |
| 12 | Where the useful life of the capital goods exceeds the project period the proportionate credit on such capital goods may be availed in the next project where the same is being used. |
| 13 | IGST credit shall be used first to pay IGST and the balance may be used for paying CGST or SGST. However, only after fully utilising the IGST credit, credit of CGST or SGST shall be used. [Rule 88A] |
| 14 | The procedure for assessment under rule 100 has been rationalised |
| 15 | The procedure for issuing notice and order for demand has been rationalised and relevant forms have been notified. |
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Author Bio
In case where builder has opted for Composition scheme and in any Financial year procurement of goods and services from registered dealer falls short and procurement is 70% only instead of 80%. So in this case whether to pay GST on 10% i.e. 80% less 70% or to pay GST on total 30% (100% less 70%).
Please guide.
Whether the Builders can sale the Open Land area for which FAR taken and used for construction of Apartment
sir, ITC is not availed , it is taken in ineligible itc how gst can be closed in case of 1% or 5% gst payment on a building project what is the treatment of ineligible itc in the aspect of GST registration closing
Sir
Can you Share acopy of Tax Invoice issued by Builder to ist Customer for sale of Flate, separating the cost of Land and cost of Construction.
Dear sir,
I had booked a flat in sobha city gugaon in jan 2018 and 30% of the total amount was paid before 01 April 2019 @12% GST, now the developers have raised the demand based upon 12% GST.
What is the process to know that the benefit of availing ITC by the developer is being passed upon to me (buyer)?
Thanks
Susmit Priyadarshi
my question is that builders have been working flats construction affordable housing scheme under GST regular payment but since April 2019 opted 1% builder composition scheme. What will be treatment of ITC accumulated upto 31/3/2019. can it utilized for payment of 1% composition GST. Till today only advances Only advance booking amount are being received. Not a single flat sold till to day.
If youre opting for 1 % , the accumulated GST part before 31st march 2019 needs to be reversed completely and it cannot be used to set off against 1 % tax liability
We have booked agreement in pre-GST Era i.e. 12/06/2017 and half payment done in pre-GST era. 25% Payment to made till OC and Balance 25% after receiving OC. What will GST Liabilty for payment made after GST era.
Is there is any relation of CC/OC Date for chargeabilty of society formation etc chrges
I have booked 2 BHK flat in 2015. In 2018 I have got a possession but I did not take it.
In Jul-20, I surrendered this unit to builder and same got replaced with 3 BHK under construction flat in same project. Now I have got offer of possession in Feb-21.
Current GST slab is 5% but in new demand letter, builder has asked to pay 12% GST. I talked with their team, as per them any under construction unit which is booked before Apr-2019 is liable to pay 12 % GST.
I have paid 12% GST on each demand throughout the period since GST is introduced. I never got discount waiver or ITC but builder has asked me to sign the document related to discount as it is part of RERA.
Kindly help me on this matter as it is clear misuse of GST unawareness.
I HAVE BOOK AFLAT OF 610 SQ FT.AREA INCLUDING SUPER BUILTUP AT 19 LACS ON 19/10/2020 (BOOKING dATE 05/2019) BUILDER CHARGE GST FROM ME AFTER REFISTRATION AT @5% WHAT I DO PL SUGEST ME IN SAME BUILDING OTHESR SOME FLAT AREA IS APPROX. 1250 SQ FT. BUT COST IS BELOW 40 LACKHS
Dear Sir
When builders will pay GST Under Composition Scheme for Flat sale deed, sale agreement or advance received from customers
Hello Sir,
How can I find out the GST paid by builder, if they are not providing it in Invoice.
We have paid 40 percent of total sale value which includes around 5L of GST . The project has lost the Environment Clearance now. If i cancel the sale agreement – Builder is saying they will forfeit the GST amount. Is this legal?
I have booked a Flat for Rs.27,61,700/- plus applicable GST having Carpet Area-583 Sq.ft. & Saleable Area-921 Sq.ft. vide an agreement for sale and constructions of the flat dated 16/03/2018.
I have paid total amount of GST Rs.2,56,188/- & Rs. 3,504/- @12% & 1% on Rs.21,34,916/- and Rs. 3,50,434/- respectively as per prescribed Government rate.
Builder has send the final demand note for taking over the possession of flat with a demand note for Rs.2,79,110/- without passing benefit of Input GST credit.
Please suggest and provide order if any.
I will be very thankful to you in this regards.
Hello Sir, I booked flat in Bangalore in Jan 2020 and did the registration On May 28th. Flat cost is 53.40 lacs. Builder charged me 12% GST. Can I claim the benefit of ITC from the builder now?
Sir
If the flat is booked and not registered (only advance amount is received in Sep-2020). Whether I have to pay GST @5%.Please clarify me.
with Regards
Query regarding gst % ( 1% OR 5%)
If a project has 50 % affordable housing flats(i.e.60 sq m in metropolitan cities having value up to 45 lakh )
& 50 % Non Affordable housing flats (i.e. other flats having carpet area more than 60 SQM & value is above 45 lakh)
what will be the rate of GST on such project.
I have purchased flat in 26 march 2019 having total cost of 24.5 lacs, and agreement value is of 2175000/- . Stamp duty and registration charges of 174000/- .but in this documents there is no mention of gst charges..
Please suggest us, how many percent of gst apply
Excellent explanation sir for all the queries.
Hi Sir,
I registered the flat after the April-2019 and made all payments beyond the revised GST rate date.
Registration of flat was done on june 2019.
And now at the time of possession (sept 2020), builder is asking for 8% GST (old rate) and he never mentioned anything about GST during registration.
I told him that i will pay 1% GST as per new rule, but he is denying and asking for 8% GST(then only he will give possession).
Please sir, help me what shall i do for this.
Regards,
Ranjeet
RESPECTED SIR, BELOW ARE THE PURCHASE RATIO OF NEW SCHEME AFTER 01/04/2019 :
TOTAL PURCHASE –> 100LACS
RD PURCHASES GOODS/SERVICE –>70 LACS
STEEL PURCHASE URD–>5 LACS
LABOUR TO URD–> 25 LACS
WHAT ARE THE TAX LIABILITIES FOR ABOVE CRITERIA ?
KINDLY GUIDE US..
TOTAL PURCHASES(GOODS/SERVICE) – 100 LACS
RD PURCHASES GOODS/SERVICE ->70 LACS
STEEL – PURCHASE URD ->5 LACS
LABOUR TO URD ->25 LACS
SO ,AS PER ABOVE CRITERIA IS THERE ANY TAX LIABILITY ?
I want to know what is the HSN code of Property Developer, which is shown GSTR-1
Dear Sir, I have taken a flat last year in Aug and builder charged me a GST of 12%. A month back I got know that if a person is eligible for PMAY scheme, he/she should give GST of 8%. We have already paid 90% of the amount. Builder is telling me that 8% GST will be applicable only for the remaining 10%. I feel this is not logical. Could you please guide the best way forward?
Dear Sir,
We are a Developer. And Our Project started in March 2018. We had received some advance form the Customers. And for the Same, we had paid GST on Advance receipt @ 18 %. And construction was not completed till March 2020, so sales were not booked in any of the previous years. Now we have opted for the new compostion scheme so our supply will attract GST @ 5 %. so, my doubt is
1. Can we reverse the GST which we had paid on Advance receipt against this sale ?
2. should we charge 5 % GST extra from the customers ? or should bear GST Exp on our own ?
Sir
A builder in construction of Lawyers Chamber. Rate of GST for construction ?? & can he take input on material purchase. As he has the whole completion contract.
Dear sir,
Expeses paid such as ameinities charges, drainage charges, FSI fee or other major minor charges by builder to municipality of town planning is to be considered as exempt supply or esle activities covered in schedule III for calculating 80:20 ratio. Whether RCM apply on such exp.?
Sir,
I have questions in my mind that in case of builder’s 80:20 ratio should considered financial year wise or upto the period of completion certificate for particular project completion? Also, GST credit reversal of f.y.2018-19 charged to profit and loss of f.y.2019-2020 is considered for 80:20 ratio of f.y.2019-2020?
Sir,
In case of builder’s new scheme of 80:20,
Interest paid by builder to customer on loan taken by customer from bank. Such interest is in nature of reimbursement of exp. i.e. interest paid on loan by customer to bank later such interest is reimburse by builder to customer untill the possession of property not given to customer. Then in such case can builder considered such interest amt. as inward supply from URD and also it is to be considered while calculating ratio of 80:20 ?
Can interest paid by partnership firm to partner on capital is considered as exempt supply ? and also further it is liable to pay gst by firm for service received from unregistered person while calculating 80:20 ratio in case of builder’s.
We given our old house and land for development to Builder in50:50 with development agreement registered in Sub registration office in 2015. Now project completed and NOC was issued in Jan2020. Now builder says oweners should pay GST@12% to their got share flats.
hence please tell me who should pay GST and what %,?
.
i am land holder. My land give to builder joint venture basis. Flat is ready but builder say 5 % GST pay reversal basis . pl suggest , land holder pay gst . which act PL
Sir,
please guide me on Present GST for Developer and Land ownner
Sir
Project started in 2015.gst came in July 17. Approx 75% project complited in july 17.I have booked flat in feb 18.Can builder charge gst 12%for that portion for which they did not pay gst?
Is there any system in gst act that builder charge gst only on proportionate basis for transition period.
I want to know GST rates for Land Developers
Sir,
I have booked flat in 2009 in under construction project and builder had issued allotment letter and I have paid him money (with Service tax after applicable date) on progress till 2014 and in 2014 I approached high court for execution of agreement and I further deposited part money in the court (with service tax). after a brief period now the project is complete and O.C is issued in 2018 and now he’s willing to execute an consent term in the court and I still have to pay him balance money + car parking charges + other charges (maintenance for 2 yrs / property taxes / development charges / legal charges / club membership etc).
He’s charging 12% GST on the balance amount & car parking charges
And
18% GST on other charges.
Do I need to pay the GST as project has already been issued O.C in 2018 & are the GST % mentioned above appropriate.
I have booked under construction flat on 1st Jan 2018.
It is still not completed and now i have asked for possession of my flat.
Developer has asked me to pay three different percentages of GST based on payment done date-by-date after booking.
Payment done from 1st Jan 2018 to 1st April 2018 = 8 %
Payment done after april 2018 to 1st Feb 2019 = 5%
and
Payment done after 1st Feb 2019 to till date = 1%
Please advice, is this correct formula to count GST on under construction flat ?
We want to build a Residential House in kolkata, (i.e;cooperative housing society) new GST rate for builder . Our builder asking 18% GST.
i booked flat in Mumbai suburb before Dec18, builder asked for 12% GST which we paid with 10% booking. even after new notification in Apr19, builder is asking for 12% GST. Agreement value is 1.2 cr. i am salaried. so no claiming of GST benefit etc. for new flats booking they are charging 8%. how it can be for same building – mine old booking and someone’s new booking today, there can be two GST rates of 12% and 8%?
please advise since high tax rate is big un-necessary burden.
Hi Sir,
I am a developers my project is complete before 01/04/2019 my completation certificate is received so i have no chose new option so my party payment is outstanding so gide me i have received some amount after 01/04/2019 i liable for gst tax gide me ?
you will have to pay gst
Thank you. Well written.
Hi Sir,
I have purchased a under construction 2BHK Flat in Hyderabad in the month of Dec 2018 with a sale agreement of 50 lcas (43.5 lacs flat cost + 3 lacs Amenitites ) and i did not registred it due to changes in GST rates after April 01, 2019.
My builder is asking me to pay 5% GST for Govt registration value which is 26 lacs and for remaining 24 lacs he is asking me to pay 18% GST. I took a loan from The Jammu and Kashmir Bank with a sale deed of 50 lacs and they sanctioned 35 lacs and remaining amount i have paid.I paid complete Flat Amount in March 2019 to the Builder.
Please suggest me whats the exact GST i need to pay now.
Hi Sir,
I have purchased a under construction 2BHK Flat in Hyderabad in the month of Dec 2018 with a sale agreement of 50 lcas (43.5 lacs flat cost + 3 lacs Amenitites ) and i did not registred it due to changes in GST rates after April 01, 2019.
My builder is asking me to pay 5% GST for Govt registration value which is 26 lacs and for remaining 24 lacs he is asking me to pay 18% GST. I took a loan from The Jammu and Kashmir Bank with a sale deed of 50 lacs and they sanctioned 35 lacs and remaining amount i have paid.I paid complete Flat Amount in March 2019 to the Builder.
Please suggest me whats the exact GST i need to pay now.