Consequent upon recommendations by GST Council in the 34th Meeting held on 19th March, 2019, a new composition tax scheme for Real Estate Sector has been brought in with effect from 1st April, 2019:

1. Real Estate will be taxed at 5% without input tax credit and 1% for affordable housing without input tax credit.

2. Developers of projects who have started constructions before due date will get a one-time option to choose the new rate or old rates

3. Under new scheme, 80% of inputs and input services for construction should be procured from registered persons. If it falls below 80%, then tax is to be paid by the developer at 18% on RCM basis (except for cement which is at 28% and capital goods at applicable rates under RCM).

4. The exemption notification no. 12/2017 has been amended to include the services provided by the land owner to the developer by way of Transfer of development rights/ FSI/ Long term lease for the residential projects. The above exemption shall be subject to the conditions that all the flats are sold prior to OC.

5. The RCM notification 13/2017 has been amended to notify the services provided by the land owner to the developer by way of Transfer of development rights/ FSI/ Long term lease for the residential projects as specified services under reverse charge i.e. under Sec 9(3).

6. Up to 15% of commercial development to be treated as residential property only for taxation purposes.

7. The area of construction should be considered as the basis for calculating the proportion of credit attributable to taxable / exempt supplies covered under entry 5(b) of schedule II (i.e. Construction services).

Notifications No. 03/2019to 08/2019 – Central Tax (Rate), all dated 29.03.2019; Notification No.16/2019CT dt. 29.03.2019 amending the CGST Rules, 2017; and Order No. 4/2019 – CT dt. 29-03-2019

Title Notification No. Date
GST rate on supply of goods for real estate sector under RCM by unregistered person Notification No. 08/2019-Central Tax (Rate) 29/03/2019
GST on real estate sector under RCM on supply of goods or services from unregistered supplier Notification No. 07/2019-Central Tax (Rate) 29/03/2019
CBIC notifies person liable to pay GST on development rights, FSI etc Notification No. 06/2019-Central Tax (Rate) 29/03/2019
CBIC notifies Services to be taxed under RCM of real estate sector Notification No. 05/2019- Central Tax (Rate) 29/03/2019
GST on Real Estate Sector- CBIC exempt certain services Notification No. 04/2019-Central Tax (Rate) 29/03/2019
GST rates on real estate sector services wef 01.04.2019 Notification No. 03/2019-Central Tax (Rate) 29/03/2019
Source- 1st Edition of GST Council Secretariat’s News-Letter Dated : 1st May, 2019

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