Case Law Details
In re Prime Property Developers (GST AAR Kerala)
The GST rate for the construction of residential apartments, excluding affordable ones, has been a topic of discussion. A recent ruling by AAR Kerala addresses this issue, providing clarity on the applicable GST rate and taxable value for such constructions. In this article, we will examine the ruling and understand the implications for Prime Property Developers and the real estate sector.
Analysis: The ruling analyzes the GST rate and taxable value for the construction services of villas provided by Prime Property Developers. As per the contention of the applicant, the villas fall under the category of residential apartments other than affordable ones. The applicant refers to specific notifications, including Notification No. 11/2017 Central Tax (Rate) and its amendments, to support their argument for a GST rate of 7.5% for such villas.
The ruling acknowledges the new tax structure introduced for the real estate sector, effective from April 1, 2019. It clarifies that the services of construction of villas provided by Prime Property Developers fall under the description mentioned in Item (ia) of SI. No. 3 of Notification No. 11/2017 Central Tax (Rate). Accordingly, the applicable GST rate for these services is 7.5% (3.75% CGST + 3.75% SGST) subject to the conditions mentioned in the respective entry.
Regarding the taxable value, the ruling refers to Paragraph 2 of Notification No. 11/2017 Central Tax (Rate). It states that the value of land or undivided share of land in such supplies is deemed to be one-third of the total amount charged. This allows the applicant to claim a deduction of one-third of the total amount charged when determining the taxable value.
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