Notifications relates to Rate of Tax payable on Real Estate Sector Services and Goods, Applicability of Reverse Charge Mechanism on Real Estate Goods and Services and also Applicability of Reverse Charge Mechanism on Purchase of Goods and Services related to Real Estate Sector.
1. GST shall be Payable at the rate of 9% in case of Supply of Goods other than Capital Goods and Cements, by Unregistered Person to Promoter for construction of the project on which tax is payable by the promoter as recipient of goods under sub- section 4 of section 9 of GST Act. (Notification No. 08/2019 – UT(Rate) dated 29.03.2019 comes in to force on 04.2019
Analysis :-
– Supply by Unregistered Person to Promoter
– Supply related to Construction
– Supply after 04.2019
2. Specified Reverse Charge shall be applicable on Short fall of Purchased of Goods or Services or Both other than TDR, FSI, Long term Lease, in a Financial Year which is lesser than 80% as notified should be purchased from Registered Person. In such case Promoter shall be liable to pay tax under reverse
(Notification No. 07/2019- UT( Rate) dated 29.03.2017) comes in to force on 01.04.2019
Analysis:-
– Purchased of Goods (Cement/Capital Goods) or Service or Both
– Short Fall of 80% on total Purchased for Particular Financial Year
– Pay GST under RCM – by Promoter
3. Specified Class of Registered Person liable to Pay GST on TDR/FSI as defined in Notification No. 06/2019- UT( Rate) dated 03.2019
4. Addition of List of Services under Reverse Charge Mechanism – Real Estate Sector
Notification No. 05/2019-UT(Rate) dated 29.03.2019
| Nature | Provider | Recipient | Liability to Pay GST | Remarks |
| Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter. | Any person | Promoter. | Promoter | Irrespective to the things whether provider is registered or not |
|
Long term lease of land (30 years or more) by any person against consideration in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name) and/or periodic rent for construction of a project by a promoter. |
Any person | Promoter. | Promoter | Irrespective to the things whether provider is registered or not |
5. Government has provided exemption Supply of Services – For TDR/FSI And Land Lease
(Notification No. 04/2019 – UT (Rate) dated 29.03.2019 Comes in to force on 01.04.2019
– Analysis:-
– Supply of Service (TDR/FSI/Lease) on or after 04.2019
– Exemption shall be available only to the extent of residential Apartment and not to the Commercial Apartment
– Formula –
GST payable on TDR or FSI (including additional FSI) or both for construction of the project] x (carpet area of the residential apartments in the project ÷ Total carpet area of the residential and commercial apartments in the project )
– Condition for Exemption:-
Provided that the promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion of value of development rights, or FSI (including additional FSI), or both, as is attributable to the residential apartments, which remain un-booked on the date of issuance of completion certificate, or first occupation of the project, as the case may be
– Determination of Value
“1A. Value of supply of service by way of transfer of development rights or FSI by a person to the promoter against consideration in the form of residential or commercial apartments shall be deemed to be equal to the value of similar apartments charged by the promoter from the independent buyers nearest to the date on which such development rights or FSI is transferred to the promoter.
1B. Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first occupation, as the case may be.”
– Maximum Amount of Tax Liability under RCM as above
For Affordable Residential Apartment – 0.5% Of value of Project
For Other than Affordable Residential Appt – 2.5% of Value of Project
6. Rate of GST on Real Estate Project and Residential Real Estate Project after 01.04.2019
Notification No. 03/2019- Central (Rate)
| Particular | Rate | Condition | Note |
| Construction of affordable residential apartments by a promoter in a Residential Real Estate Project | .75 | Provided that the central tax at the rate specified in column (4) shall be paid in cash, that is, by debiting the electronic cash ledger only; has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) | commences on or after 1 st April, 2019 or in an ongoing RREP in respect of which the promoter |
| Construction of residential apartments other than affordable residential apartments by a promoter in an RREP | 3.75 | ||
| Construction of commercial apartments (shops, offices, godowns etc.) by a promoter in an RREP | 3.75 | ||
| Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, | .75 | ||
| Construction of residential apartments other than affordable residential apartments by a promoter in a REP other than a RREP | 3.75 | ||
| Construction of an apartment in an ongoing other than above | 6 | ||
| Construction of a complex, building, civil structure or a part thereof, including,- (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item | 9 |
Provided that in case of ongoing project, the registered person shall exercise one time option in the Form at Annexure IV to pay central tax on construction of apartments in a project at the rates as specified for item (ie) or (if), as the case may be, by the 10th of May, 2019; Provided also that where the option is not exercised in Form at annexure IV by the 10th of May, 2019, option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; Provided also that invoices for supply of the service can be issued during the period from 1st April 2019 to 10th May 2019 before exercising the option, but such invoices shall be in accordance with the option to be exercised.;
♦ Under Standing of Terms:-
– “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP;
– “ongoing project” shall mean a project which meets all the following conditions, namely-
(a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019:-
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning
(b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in subclause
(a) above that construction of the project has started on or before the 31st March, 2019; (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019;
– “Residential apartment” shall mean an apartment intended for residential use as declared to the Real Estate Regulatory Authority or to competent authority;
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