On the 19th of October, 2023, the Ministry of Finance, Department of Revenue, Government of India, issued Notification No. 18/2023-Integrated Tax (Rate). This notification introduces significant amendments to the taxation of construction services, particularly those related to the construction of complexes, buildings, and parts intended for sale to buyers. In this article, we will explore the details of these changes and their potential implications.
Detailed Analysis:
1. Modification of Opening Paragraph: The notification modifies the opening paragraph of the existing regulation by substituting complex language with a clearer definition. It replaces the words, brackets, letters, and figures related to “sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act” with a more concise and specific definition. The new definition narrows down the scope of taxable services related to construction. It focuses on complexes, buildings, or parts intended for sale to buyers where the amount charged includes the value of land or undivided share of land. The tax does not apply if the entire consideration has been received after the issuance of a completion certificate or after the first occupation, whichever is earlier.
Conclusion:
Notification No. 18/2023-Integrated Tax (Rate) issued by the Ministry of Finance, Department of Revenue, Government of India, introduces essential amendments to the taxation of construction services, specifically those related to complexes, buildings, and parts intended for sale to buyers. These changes provide a more precise and clear definition of taxable construction services, addressing instances where the value of land or undivided land share is included in the amount charged to the service recipient.
These amendments aim to streamline and clarify the tax structure related to construction services, ensuring that it aligns with the public interest. By providing a specific and unambiguous definition of taxable services, this notification simplifies tax compliance and administration.
Effective from the 20th of October, 2023, these changes will impact the construction and real estate sectors. It is crucial for businesses and individuals involved in construction services to comprehend these modified tax regulations and ensure compliance. The updated definition and scope of taxable services emphasize the need for a thorough understanding of the legal framework in this sector.
The Ministry of Finance’s effort to provide a clearer and more specific definition contributes to the simplification and efficiency of taxation in the construction industry, ultimately benefiting both service providers and recipients.
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 18/2023-Integrated Tax (Rate) | Dated: 19th October, 2023
New Delhi, the 19th October, 2023
G.S.R. 769(E).– In exercise of the powers conferred by clause (xiii) of section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read with sub-section (3) of section 54 of the Central Goods and Services Tax Act, 2017 (12 of 2017), ), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 12/2017-Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 687(E), dated the 28th June, 2017, namely:-
In the said notification, in opening paragraph, for the words, brackets, letters and figures “specified in sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act”, the words, “of construction of a complex, building or a part thereof, intended for sale to a buyer, wholly or partly, where the amount charged from the recipient of service includes the value of land or undivided share of land, as the case may be, except where the entire consideration has been received after issuance of completion certificate , where required , by the competent authority or after its first occupation , whichever is earlier”, shall be substituted.
2. This notification shall come into force with effect from the 20th October, 2023.
[F.No. CBIC-1 90354/1 95/2023-TO (TRU-I I)-CBEC]
(Rajeev Ranjan)
Under Secretary to the Government of India
Note:-The principal notification No. 12/2017-Integrated Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 687(E),dated the 28th June, 2017.
