In this article, I am discussing on the applicable rate of GST on different services boxed under Real Estate mentioning the reference of relevant provision. (After considering the Notification relating to changes in rate issued by Govt. in March 2019)

1. What are the transactions treated as supply under GST?

Definition of Supply of covers all forms of Supply of goods or Services or both. (Refer Section 7 of Levy and Collection Chapter)

Here are some of the examples which can be seen generality,

1. Sale of Scrape on Demolition of Building under Re-Development Project

–   As per Explanatory notes on the classification of services issued by the Govt. under the code 99543 which covers,

– This service code includes

– ii. wrecking and demolition services of buildings and other structures;

–   ii. wrecking and demolition services of streets and highways – Taxed at 18% as independent Service.

2. Transfer of units given at free of cost by builder to Society or Land owner

–   Definition of Supply includes Barter transaction also.

Notification No. 6/2019 Central tax(Rate) dated 29.03.2019 Prescribed that developer is liable to pay tax on constructed units allotted to Land Owner at the time of receipt of completion certificate or First occupation w.e is earlier

– For the purpose of determination of Value of Supply, one has to check “Total value of amount charged for similar apartment or unit in project from independent buyer, less value of land as deemed deduction.

3. Sale of units by Developer (PRE OC and Post OC) (Project commence after 01.04.2019)

Pre OC:- Assume Consideration received before receipt of OC

Particular Rate
Construction of Affordable Residential Housing 1% No ITC
Construction of Residential Apartment other than Affordable Housing 5% No ITC
Construction of Commercial apartment in RREP 5% No ITC
Construction of Commercial apartment other than RREP 12% with ITC

Post OC:-

– NO GST should be levible as sale of immovable Property Refer Schedule –III of GST Act

4. Transfer of tangible goods to be used in Construction Site (Inter/I ntra)

– As per Schedule – I, it relates with activity or transaction to be treated as Supply even if made with out consideration,

Supply of goods or Services or both between related persons or between distinct person as specified in section 25, when made in the course of or furtherance of business,

– In simple form, Distinct person means A person should have obtained more than registration in state or union territory

– Charge GST by following Valuation method at rate applicable on Supply.

5. Supplies by unincorporated association/ventures to members and vice-versa

–  Refer Schedule –II of Para 7 which states about the GST liability.

Clarification No. 35/9/2018- GST dated 5th march 2018.

–  However any Capital contribution towards in capital form is Out of GST Scope.

6. Transfer of Development right or FSI or Long term lease of Land

– Refer detailed Notification Notification No. 6/2019 – Central tax(Rate) dated 29.03.2019 – For Specified person – Promoter

– Refer Notification No. 05/2019- Central Tax (Rate) dated 29.03.2019 – For Reverse Charge Mechanism – Liability shifted on Promoters – Irrespective of whether Provider is registered or Not.

7. Adhering the criteria for Procurement of Minimum supply of 80% from Registered Person

– Vide issuing the Notifications Govt. have mandated the builder for procuring the goods or services from Registered Person only and short fall of which is lesser than 80% attracts shall GST 18% under RCM (Notification No. 07/2019 – Central Tax(Rate) dated 29.03.2019)

– Further, Capital Goods and Cement should have been purchased from Registered person only otherwise shall be liable under RCM at applicable rate

(Notification No. 08/2019- Central Tax ( Rate) dated 29.03.2019)

2. What are the charges apart from the construction value be includible or not?

Particular Note
Administration Fees Collected Includable – Taxed at Principle Supply
Preferential Charges for flat Includable  – Taxed at Principle Supply
Club Membership Includable –  Taxed  at Principle Supply
Local Development Fees/ Stamp Duty Not Includable – Pure Agent
Power/Sewerage & Water Charges Not Includable – Pure Agent
Parking Space Charges Includable –  Taxed  at Principle Supply
Refundable Maintenance Deposit Not Includable – Pure Agent
Cancellation Charges/Interest payment/Modification Charges/ in delay Includable  –  Taxed  at Principle Supply

Author Bio

Qualification: CA in Job / Business
Company: GVFL Limited
Location: AHMEDABAD, Gujarat, India
Member Since: 19 Apr 2018 | Total Posts: 13
Working in one of the oldest Venture capital company and handling overall operation of Accounts, Taxations and Finance. Has intensive experienced working in Corporate compliance and Legal matters. Had handled Assessment and Search cases under Tax Laws. Blogger by passion. View Full Profile

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October 2021