FAQs (Part II) on real estate – GST
GST
Dated:- 15-5-2019
F. No. 354\/32\/2019-TRU
\nGovernment of India
\nMinistry of Finance
\nDepartment of Revenue
\n(Tax Research Unit)
\nDated the 14th May, 2019, New Delhi
\nSubject: FAQs (Part II) on real estate- reg.
\nA number of issues have been raised regarding the new GST rate structure notified for real estate sector effective from 01-04-2019. A compilation of Frequently Asked Questions (FAQs) containing 41 questions was issued on 7th May, 2019. Part II of the FAQ is presented below. The answers to the FAQs have been given in simple language for guidance and easy understanding of all stakeholders in the real estate sector. They do not have force of law. In case of conflict, the gazette notifications, which have legal force, shall have precedence.
\nSl. No.
\nQuestion
\nAnswer
\n1.
\n
\nIn case of an area sharing arrangement between a Landowner-Promoter and a Developer-Promoter, where the Project qualifies to be considered an “Ongoing<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rates of 1% and 5% without ITC are applicable to the apartments booked by the land owner promoter in an ongoing project as well as a new project which commences on or after 01-04-2019. The land owner promoter shall be entitled to ITC in respect of tax charged to him by the developer promoter on construction of such apartments. However, the land owner promoter shall not be entitled to avail ITC on any other services or goods used by him. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nt charged by the promoter from the buyer of the apartment including preferential location charges, development charges, parking charges, common facility charges etc.” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n r FSI? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n cts. The supply of service by way of construction of such apartments against construction wholly or partly in the form of TDR\/FSI is a taxable supply subject to GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n m in specified metropolitan cities or 90 sqm in places other than the specified metropolitan cities and the gross amount charged for similar apartments from independent buyers is not more than rupees 45 lakhs. (Please refer to para 2A of notification No. 11\/2017- CTR dated 28.06.2019 as amended vide notification No. 3\/2019- CTR dated 29.03.2019), or = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n econd proviso applicable to clause (i) to clause (id) of serial 3 of Notification No. 11\/2017 (as amended) can be adjusted against the output liability of 5% \/ 1%? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n old rates of 12%\/8% in respect of an ongoing project? = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n tion of affordable residential apartment. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n oter shall not be required to reverse input tax credit of tax charged from him by the Developer – Promoter on the ground that he has not made payment for the service received from the Developer – Promoter. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" FAQs (Part II) on real estate – GST GSTDated:- 15-5-2019F. No. 354\/32\/2019-TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit) Dated the 14th May, 2019, New Delhi Subject: FAQs (Part II) on real estate- reg. A number of issues have been raised regarding the new GST rate structure notified for real … Continue reading “FAQs (Part II) on real estate – GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-68857","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/68857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=68857"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/68857\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=68857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=68857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=68857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n3.
\n
\nResidential Real Estate Project (RREP) shall mean a REP in which the carpet area of the commercial apartments is not more than 15% of the total carpet area of all the apartments in the REP (Clause xix). “Carpet area” shall have the same meaning as assigned to it in clause (k) of Section 2 of the RERA, 2016. Whether non-saleable areas such as society office, club house, etc., are to be taken into consideration for determining 15% for deciding whether the project is RREP or not?
\nThe term “Residential Real Estate Project (RREP) has been def<\/p>\n
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\nHowever the value shall not include stamp duty payable to the statutory authority, maintenance charges \/ deposits for maintenance of apartment or maintenance of common infrastructure.
\n5.
\n
\nIn case of a Real Estate Project, comprising of Residential as well as Commercial portion (more than 15%), how is the minimum procurement limit of 80% to be tested, evaluated and complied with where the Project has single RERA Registration and a single GST Registration and it is not practically feasible to get separate registrations due to peculiar nature of building(s)?
\nThe promoter shall apportion and account for the procurements for residential and commercial portion on the basis of the ratio of the carpet area of the residential and commercial apartments in the project.
\n6.
\n
\nIn an area sharing model, a promoter<\/p>\n
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\nWhether the quantum of TDR or FSI (including additional FSI) or both shall be taken only in respect of un-booked apartments as on the date of issuance of Completion Certificate or first occupation of the project for the purpose of formula?
\n
\nThe GST on transfer of development rights or FSI (including additional FSI) is payable at the rate of 18% (9% + 9%) with ITC under Sl. No. 16, item (iii) of Notification No. 11\/2017 – Central Tax (Rate) dated 28-06-2017 (heading 9972).
\nThere is no exemption on TDR or FSI (Addl. FSI) for construction of commercial apartments. Therefore, GST shall be payable on TDR or FSI (including additional FSI) or both used in respect of
\n (i) carpet area of commercial apartment and
\n (ii) un-booked residential apartments as on the date of issuance of Completion Certificate or first occupation of the project for the purpose of formula.
\n
\n8.
\n
\nIn case of Redevelopment, Slum Rehabilitation or similar arrangements, the Devel<\/p>\n
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\nWherever tax is paid on construction of such apartments at the effective rates of GST of 8%\/ 12% with ITC, the promoters shall be eligible for ITC, including ITC in relation to construction of units to be allotted to the existing occupiers even though there may not be a monetary consideration but the consideration is in the form of grant of TDR\/FSI.
\n9.
\n
\nIn case of redevelopment or slum rehabilitation project, (new or an existing project) whether the constructed units supplied to existing occupiers by the developer free of monetary consideration are taxable?
\nIn case of ongoing project in respect of which the promoter has opted for new rates of 1% \/ 5%, it may be clarified whether the units being supplied free of monetary consideration to existing dwellers will fall within the definition of affordable hou<\/p>\n
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\n(b) They are being constructed under any of the schemes specified in sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the said notification.
\n10.
\n
\nWhat shall be the rate of GST applicable on projects in respect of which OC has been issued prior to 01.04.2019, but the balance demands are pending? Such projects are neither projects which commence on or after 01.04.2019 nor ongoing projects.
\nTime of supply of the service by way of construction of apartments in such p<\/p>\n
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\nNo. GST on services of construction of an apartment by a promoter at the rate of 1%\/ 5% is to be discharged in cash only.
\nITC, if any, may be used for discharging any other supply of service.
\n14.
\n
\nIf a developer-promoter opts to pay tax for the ongoing project of affordable residential apartment at the new rate, can he use the ITC available to him under the second proviso applicable to clause (i) to clause (id) of serial 3 of Notification No. 11\/2017 (as amended) for payment of tax at 1%\/5%?
\nReply as in Q. No. 13 above.
\n15.
\n
\nThe condition in Notification No. 3\/2019 specifies that 80% of inputs and input services should be procured from registered person. What about expenditure such as salaries, wages, etc. These are not supplies under GST [Sl. 1 of Schedule III]. Now, my question is, whether such se<\/p>\n
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\nNo, if the developer opts to continue to pay tax at the old rates of 12%\/8% in respect of an ongoing project, the condition of receiving 80% of inputs and input services from the registered person doesn't apply.
\n18.
\n
\nWhether the inward supplies of exempted goods \/ services shall be included in the value of supplies from unregistered persons while calculating 80% threshold?
\nYes. Inward supplies of exempted goods \/ services shall be included in the value of supplies from unregistered persons while calculating 80% threshold.
\n19.
\n
\nWhether the purchase of Land from an unregistered person shall be required to be included in the value of Input and Input Services for the purpose of calculation of 80% threshold?9
\nNo. As per Schedule III, Entry No 5, of CGST Act, sale of land is not a supply. In addition, as per 5th proviso to entries at Sl. No. (i), (ia), (ib), (ic) and (id) against Serial No 3 in the Notification N<\/p>\n
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\n21.
\n
\nWhether the amended rule 42 shall apply to all RREPs including ongoing projects?
\nIn case of an ongoing RREP, in respect of which promoter opts for the new rates of 1% \/ 5% and which underwent transition of ITC consequent to change of rates of tax on 01.04.2019, ITC determined under sub- rule (1) of rule 42 shall not be required to be calculated finally on the completion or first occupation of the RREP.
\n22.
\n
\nWhether separate Form (Annexure IV) shall be filed by the Developer in respect of each of the Ongoing Projects?
\nYes.
\nThe promoter has to exercise the option for payment of tax at the old rates of 8%\/ 12% with ITC for each of the ongoing projects separately.
\n23.
\n
\nOn what basis a Contractor \/ Sub-contractor executing a composite supply of works contract in terms of clause (va) i.e. 12% for affordable residential apartments, shall satisfy himself as regards condition of 50% of the total carpet area?
\nTh<\/p>\n
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\n25.
\n
\nWhether the exemption given by way of Entry 41A \/ 41B of Notification No. 12\/2017-CTR shall be available in respect of development rights etc. transferred to a person other than promoter? Please clarify whether sub-clause (v) in clause (zk) in section 2 in RERA Act, 2016 covers a person who purchases TDR as developer?
\n
\nThe exemption is available only on TDR\/ FSI transferred on or after 1st April, 2019 for construction of residential apartments by a promoter in a real estate project.
\n26.
\n
\nHow to determine value of construction services provided by the promoter to land owner in lieu of transfer of development rights, when land owner is not registered?
\nValue of construction services provided by the promoter to land owner in such cases shall be determi<\/p>\n
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