GST on under construction house property (including affordable housing) w.e.f. April 01, 2019

To boost demand in the real estate sector, the GST Council, on February 24, 2019, slashed tax rates for under-construction flats to five per cent and affordable homes to one per cent, effective April 1, 2019. Currently, the Goods and Services Tax (GST) is levied at 12 per cent with input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats, where the completion certificate is not issued at the time of sale. For affordable housing units, the existing tax rate is eight per cent.

With a view to assist India’s real estate sector jump out of a slowdown, the Goods and Services Tax (GST) Council on February 24, 2019 has taken an initiative to cut down the GST rate on under construction houses w.e.f. April 01, 2019 with some other benefits which is mentioned below for proper analysis of readers:

GST Rate on under Construction house

Details of the scheme shall be worked out by an officers committee ans shall be approved by the GST council in a meeting to be called specifically for this purpose.

The law and fitment committee will draft the guidelines by March 10 which will be taken up in a subsequent GST Council meeting, Jaitley added.

Hope this will help the businessman to plan the tax accordingly.

For further query you can write us at: mishradevesh12@gmail.com or visit www.sbmconsultants.org

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Partner at D K M & Associates, Chartered Accountants. Earlier worked with BIG 4 Accounting and Audit firm. Expertise in Ind AS, Goods & Services Tax, Income Tax, Auditing and Assurance, Internal Controls, Business Process Consultancy, Forensic Accounting and Auditing with various rules an View Full Profile

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20 Comments

  1. kisan tanawade says:

    Dear Sir,
    मी बारामती मध्ये 1BHK- 651 Sq.feet फ्लॅट oct.2019 मध्ये बुकिंग करून खरेदी खत केले आहे त्यामध्ये स्टॅम्प ड्यूटि व नोंदणी फी मिळून 7% फी भरलेली आहे फ्लॅटचे ९५% काम पूर्ण झाले आहे. अंदाजे डिसेंबर २०२० ते जानेवारी २०२१ मध्ये काम पूर्ण होईल व ताबा मिळेल परतू मला आता बिल्डर ६% GST भरण्यास संगत आहे तरी सध्या या Position मध्ये GST किती % भरावा लागेल किंवा त्या बुल्डिंगला GST आहे किंवा नाही हे कसे कळेल याची कुपया माहती द्यावी …..
    आपला
    Kisan

  2. Dharmendra Kumar Sinha says:

    Total Consideration value of Under Construction flat is Rs. 85.00 Lac, Payment made Rs. 35.00 lac, Installment amount Rs.8.50 lac. What would be the GST amount Per installment?

  3. Ramesh Kundalia says:

    Flat booked at kasarvadali thane for rs 5000000/- on 10th January 2020 builder says project is of before 1april 2019 charges gst @ 8 percent what is the gst please let to know

  4. snd.gracias@gmail.com says:

    What is the GST for an under construction property?
    Cost of the flat is 1.2 cr.
    Property will be ready in jan 2021.
    As per the Govt announcement it is supposed to be 5%. Kindly share the views and relevant articles on the right information.

  5. AMM says:

    My Question:
    What should be CGST & SGST rate ?

    Booked flat under construction in 2018 at affordable housing.
    DETAILS:
    1. Project -Sunteck West World 1 at Naigon(East), Village-Tivri, Taluka-Vasai, Maharastra-401208.
    2. Usable Carpet Area- 356 sq.Ft.,
    Flat-1 BHK
    3. Cost- Rs.29.18 lac + Stamduty.
    4. Stamp duty & Registration paid dt- Jan 2019.
    5. Paid till March 2019- 40% of Agreement Value as per builders demand on completion of slab.

    Builder charging 6% CGST & 6% SGST on every Demand from Dec’2018 till now.

    A. Is Builder Tax rate is right or wrong? Understand its 1% only.
    B. How to claim Excess rate from builder?
    C. Where to make complaint like Rera, other Givt Dept? Mail address requires.

    1. debashis ghosh says:

      my garage space is 150 sqf i already paid to builder 400000.00 current market value 588000 at the time of e-assessment what will be my gst % and value of gst
      thanks
      d ghosh

  6. Jeyakkumar says:

    Sir, I have purchased an under construction flat value below 30lakh. Now builders asking GST 5%. I have little confused about GST rate. Whether GST will be 5% or 1%. Totally 6 flats they are constructing. Pls suggest me

    1. SURESH says:

      we have given our land for developement purposes as a commercial building.builder got partial occupicncy certificate on dt13-3-2018. till date he has not regestered on our name . we want to regester now .Please advice me the applicable GST %.and also %on going balance project which may compleated by APRIL OR MAY 2020.KINDLY ADVICE
      THANKING YOU SIR

  7. sanjay mishra says:

    Dear Sir,

    I have purchase a flat with builder in last financial year i have paid full amount without oc and cc and builder is charging 12% with ITC but as per circular jan 2019 we can get the gst refud of 8% so kindly suggest since we also get the subsidy on loan.

  8. shahid says:

    I have purchased a flat which is under construction and nearly 90% amount has been made, Will i be getting any GST benefit of 1% as i have paid 12% earlier in this. Also builder has never passed on to us the input tax credit.

    my agreement cost is below 18 lakhs
    Agreement Date – 2 jan 2019
    Stamp duty and Registration paid Date – 23 Dec 2018

    I am searching legal way to solve this issue.

  9. Shriram Nerkar says:

    I have purchased a flat which is under construction and nearly 45% amount has been made, Will i be getting any GST benefit of 1% as i have paid 12% earlier in this. Also builder has never passed on to us the input tax credit.

    my agreement cost is below 45 lakhs
    Agreement Date – 21 Dec 2018
    Stamp duty and Registration paid Date – 20 Dec 2018

    I am searching legal way to solve this issue.

  10. SIDDHARTHA KOLEY says:

    I purchased a flat which cost me Rs 32 lakhs plus 12 % Gst .Now 90 % payment already made to the builder . Balance 10% is unpaid due to non completion.As per Gst Circular dated 24.02.2019 the gst applicable will be 1 % of the cost price.Builder is saying that it is not under affordable housing. Please let me know how they can say that and not passing the benefit of the GST. tHANKS
    sIDDHARTHA

  11. Ghanshyam says:

    Dear Devesh Mishra,
    Just read your simplified version of GST. Its very insightful, I have a query about the GST rates.

    We brought a commercial space in Navi Mumbai. Its still under construction. Just foundation work in ongoing now, it started on Jan 2019.

    Our builder has paid 12% GST for it in Jan 2019.
    Now from 1st April 2019, the GST will go to 5% for the under-construction project. Wondering, we should ask money 7% from the builder? Please guide, a lot of confusion is prevailing. Will there be any adjustment by the government, to refund money etc?
    Thank you very much!
    Best wishes,
    Ghanshyam

  12. Vijay says:

    I have purchased a flat for 80 Lac (Premium/Normal Housing Project) in Bangalore in August 2018 when the applicable GST was 12%;

    At the time of booking, Occupancy Certificate was not present. Builder got OC in December 2018.

    At the time of booking i Paid 10 Lac + 12% GST extra;
    In Feb 2019, I have paid 20 Lac + 12% GST extra;

    Now i have taken loan for remaining 50 Lac and its sanctioned;
    Builder is asking full amount for registration before 31st march with GST 12%.

    My question is –

    1) If i get my loan disburse for the remaining 50 Lac after 1st April 2019; Will builder give me concession on the GST

    2) If I get it disbursed before March 31; will i get benefit later from builder

    3) Is there any provision that i would get GST benefit for the previous amount which i have already paid

    4) I spoke to builder and he said that the concession rates are not applicable on your project; What should i do ?

    Please help
    Vijay

  13. Sunny Shah says:

    Hello Sir,
    I’ve booked under construction flat in May 2018 and till date builder has received 90% amount from bank and project is still ongoing and expected to be complete in may 2019.
    How does tax calculation work for me? Do i need to pay 12% tax for remanning 10% payment? I’ve not done any property registration since BU permission is not yet received,
    Builder has clearly said to me that reduction in GST 5% won’t be benefitted to you.
    Can you please share your view .?

  14. Vaibhav says:

    I have done my flat aggreement in Jan 2019.
    The builder has given a payment order in the februrary month, but I have not paid them because NOC incomplete.
    Today builder has told me that NOC has come today, if I make the payment after 1st April 2019 then how much tax will I have to pay?

  15. DHANANJAY MORE says:

    Hello Sir,
    I have purchased a flat which is under construction & 1st slab is ready as per architect letter dt.04.02.2019. Now the developer demand payment up to the completion of first slab on 21.02.2019 also he says no GST benefit will be allow to you because 1st slab is completed on 04.02.2019. Also developet says that which ever construction is completed after month of April 2018 which will be consider for reduce GST rate. If i pay this amount after 1 April can i get benefit of reduce GST rate in this case ?

  16. Sunil Guda says:

    I have purchased a flat which is under construction and nearly 50% amount has been made, Will i be getting any GST benefit of 5% as i have paid 12% earlier in this. Also builder has never passed on to us the input tax credit.
    Second scenario is my friend has paid all the amount of the flat in Feb except the GST amount since reduction was expected.
    Builder is asking to pay 12% GST As payment is made before 31st march 2019 and new reduction is applicable from 1st April 2019
    Pl clarify for such scenarios how GST has to be treated before April 2019.

    1. CA Devesh says:

      Dear Sunil,

      Because of the anti-profiteering provision in Section 171 of the GST Act. The objective of anti-profiteering is to ensure that the benefits derived under GST, if any, should be passed on to the end user. hence you can ask your builder to and can avail input tax credit of 12% GST.

      However if your builder opt for 5% / 1% GST rate from April 2019 onwards then input tax credit will not be allowed due to conditions for reduced rate of GST.

      w.r.t payment made earlier and the rate of GST, we need to check some points:
      1. Service Provided before or after change in rate of tax
      2. Payment received before or after change in rate of tax
      3. Date of issue Of invoice

      for further assistance you can write us on mishradevesh12@gmail.com

      1. Madan Mohan says:

        Sir, GST on under construction house will be applicable on full value of the flat or only construction cost. Please confirm.

        Thanks & Regards,
        Madan

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