Real Estate Sector- New Tax Regime

Consequent upon introduction of new tax regime for real estate sector, Government has issued two trenches of Frequently Asked Questions (FAQs) for the benefit of trade and officials.

The first set of compilation of FAQs for real estate sector was issued on 07.05.2019 by CBIC to clarify doubts with regard to migration of real estate developers to new GST rates for the sector which has come into force from April 1, 2019.

The main salient clarifications of FAQs are:

i) With effect from 01-04-2019, effective rate of GST applicable on construction of residential apartments by promoters in a real estate project are as under:

Description Effective rate of GST (after deduction of value of land)
Construction of affordable residential apartments 1% without ITC on total consideration.
Construction of residential apartments other than affordable residential apartments 5% without ITC on total consideration.

ii) In case of on-going project, the promoter has an option to pay GST at the old rates, i.e. at the effective rate of 8% on affordable residential apartments and effective rate of 12% on other than affordable residential apartments (after deduction of value of land).

iii) Affordable residence having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than forty five lakhs rupees.

iv) No adjustment of accumulated credits in ongoing projects in case builder opt for lower new GST rate.

v) Builders who have received completion certificate for an ongoing project before April 1, 2019, will have to charge 12 percent GST from buyers on the balance amount due towards purchase of the flat.

vi) GST on services of construction of an apartment by a promoter @ 1%/5% is to be discharged in cash only. ITC, if any, may be used for discharging any other supply of service.

viii) Developer and not the land owner have the right to decide whether to opt for new GST rates or stick to old rates for ongoing projects.

{Reference: Circulars F. No. 354/32/2019-TRU dated 07.05.2019 and 14.05.2019}

GST on Real Estate Sector- 41 FAQs (Part I)

GST on Real Estate: CBIC release FAQs (Part II)


More Under Goods and Services Tax

One Comment

  1. geeyarem says:

    Please clarify whether GST can be collected before completing the flat or GST has to be collected from the flat buyer at the time of handing over of the flat with completion certificate.
    Please also clarify whether any receipt is to be given by the builder for having collected the GST and duly transferred to Govt.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

April 2021