Types of Real Estate Transactions: These are the following types of transactions which can take place in Real Estate Sector:
1. Supply of immovable properties (Commercial/ Residential) before completion.
2. Supply of immovable properties (Commercial/ Residential) after completion.
3. Sale of Land (Agricultural/ Commercial/ Residential).
4. Sale of rights arising out of land (e.g. TDR, FSI)
GST Rates on Real Estate till 31st March 2019
Affordable Housing Projects- 12% (before 1/3rd deduction towards land value) i.e. Effective Rate is 8% with Input Tax Credit
Other than Affordable Housing Projects- 18% (before 1/3rd deduction towards land value) i.e. Effective Rate is 12% with Input Tax Credit
*Affordable houses means houses under the existing central and state housing schemes as mentioned in items(iv) and (v) of Entry 3 of as mentioned in items (iv) and (v) of Entry 3 of Notification 11/2017-Central Tax (Rate) dated 28.06.2017 (such as Pradhan Mantri Awaas Yojana, Rajiv Awaas Yojana, Jawaharlal Nehru National Urban Renewal Mission or Housing for All etc.)
|Particulars||Applicability||Rate of Tax||Input Tax Credit|
|On ready-to-move (RTM) properties for which completion certificates are issued||Not applicable – Because Sale of building is treated as activity or transaction which shall be treated neither as a supply of good nor a supply of service as per SCHEDULE III of CGST Act,2017||–||Not available|
|On Under Construction Properties (For Homes Purchased Under Credit-Linked Subsidy Scheme)||Applicable as supply of services as per Schedule II of CGST Act, 2017||12% (effective Rate is 8% after cutting the 1/3rd amount towards the cost of land.)||Available|
|On Under Construction Properties (Other than above)||Applicable as supply of services as per Schedule II of CGST Act, 2017||18% (effective Rate is 12% after cutting the 1/3rd amount towards the cost of land.)||Available|
|On resale properties||Not applicable||–||Not available|
|On Land purchase and sale||Not applicable. As per Schedule III, sale of land is neither supply of goods nor services.||–||Not available|
|Composite supply of works
|Composite supply of works
Contract to Government Authorities
|Composite supply of works contract – for use by general public||Applicable||12%||Available|
|Composite supply of works contract – Affordable Housing||Applicable||12%||Available|
GST Rates on Real Estate on or after 01st April 2019
In the 33rd GST Council meeting dated 24.02.2019 following rates revision for residential apartments are recommended and which are finalized in 34th GST Council meeting dated 19.03.19 applicable from 01.04.2019 :
1. GST @ 1.5% (Effective rate 1% after deducting Land Cost) without ITC for affordable residential apartments.
2. GST @ 7.5% (Effective rate 5% after deducting Land Cost) without ITC for residential apartments other than affordable residential apartments.
3. GST @ 12% with ITC for commercial properties (other than specified ones which will attract GST @ 5%).
Definition of affordable residential apartment:
*In case of ongoing projects new rates will be optional.
*As far as new projects are concerned, new proposed rates will be applicable thereon. New Projects means which commences after 31.03.2019.
Meaning of ongoing projects
A project which meets the following conditions shall be considered as an ongoing project.
Option in respect of ongoing projects
One -time option (to be exercised once within a prescribed time frame) to continue to pay tax at the old rates (effective rate of 8% or 12% with ITC) on ongoing projects (buildings where construction and actual booking have both started before 01.04.2019) and which have not been completed by 31.03.2019. The option shall be exercised once within a prescribed time frame (by 10th may, 2019) and where the option is not exercised within the prescribed time limit, new rates shall apply.
New rate of GST @ 1.5% (Effective rate 1% after deducting Land Cost) without input tax credit (ITC) on construction of affordable houses shall be available for:
New rate of GST @ 7.5% (Effective rate 5% after deducting Land Cost) without input tax credit shall be applicable on construction of :‑
Impact on Transitional Credit for ongoing projects opting for the new tax rates:
With respect to transitional credits, the Press Release dated 19th March 2019 provides as under:
Conditions for new tax rates:
The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions :‑
On shortfall of purchases from 80%, tax shall be paid on input and input services by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.
Treatment of TDR/ FSI and Long term lease for projects commencing after 01.04.2019:
The following treatment shall apply to TDR/ FSI and Long term lease for projects commencing after 01.04.2019:-
1. In case of supply of FSI wherein consideration is in form of construction of commercial or residential apartments, liability to pay tax shall arise on date of issuance of Completion Certificate.
2. In case of supply of FSI wherein monetary consideration is paid by promoter, liability to pay tax shall arise on date of issuance of Completion Certificate only if such FSI is relatable to construction of residential apartments. However, liability to pay tax shall arise immediately if such FSI is relatable to construction of commercial apartments.
1. In case of supply of long term lease of land for construction of commercial apartments, tax shall be paid by the promoter immediately. However, for construction of residential apartment, liability to pay tax on the upfront amount payable for long term lease shall arise on the date of issuance of Completion Certificate.