GST UPDATE ON FAQ’S RELEASED ON REAL ESTATE AMENDMENTS PART-11

GST UPDATE ON FAQ

GST UPDATE ON FAQ’S RELEASED ON REAL ESTATE AMENDMENTS PART-11:-

In earlier update, we have discussed about some of the important FAQs pertaining to the recent amendments made for real estate sector given vide Circular No. 354/32/2019-TRU dated 07.05.2019. In the present update, we seek to discuss some more clarifications issued by the aforementioned circular.
Question no. 17:Someone booked a flat from XYZ Developers in June, 2018. As of 31-03-2019, he had paid 40 % of the value of the flat. What shall be the GST rate applicable on the remaining portion of value of the flat?
Answer:GST on the remaining portion of the value of flat payable to the promoter on or after 01-04-2019 as per the contract between the promoter and buyer shall be payable at effective rate of 1% or 5%, subject to the condition that the builder has not exercised the option to pay tax on construction of apartments at the old rates of 12% or 18%. If the XYZ developer exercises option to continue to pay tax at old effective rate of 8% or 12% by 10th May, 2019, then GST has to be paid @ 8% or 12% on remaining portion of the value of the flat; in such cases, the promoter would be entitled to permissible credit of input taxes and, as such, the price that he charges from the buyer should appropriately reflect this credit.

The above clarification indicates that GST is to be charged by the developer as per statutory provisions in force irrespective of the agreement entered into by the developer and the buyer.

Question No. 18:I am a beneficiary of PMAY- CLSS and carpet area of my house being constructed in an ongoing project is 150 sqm. Am I eligible for new rate of 1% on same?

Answer: You are eligible for new GST rate of 1%, subject to the condition that the developer-promoter with whom you have booked the house has not exercised option to pay tax on construction of apartments at the old rate of 8%.

The above clarification supports the view taken by us in our GST Update on Real Estate Sector Part-5 wherein we had mentioned that the definition of ‘affordable residential apartment’ given in the notification no. 03/2019-Central Tax (Rate) dated 29.03.2019 includes apartment being constructed in an ongoing project under any of the specified housing schemes, in respect of which promoter has not exercised option to pay central tax on construction of such apartments at the old rates. Consequently, apartments constructed under any of the specified housing schemes of the government such as Credit Linked Subsidy Scheme with respect to an ongoing project will be eligible for concessional GST rate of 1% applicable for affordable residential apartments irrespective of the fact that the said apartments do not satisfy the criteria of carpet area of 60/90 square meters and consideration upto Rs. 45 Lakhs. However, after amendment made vide notification no. 03/2019-Central Tax (Rate) dated 29.03.2019, the commencement of new project under any of the specified housing schemes of the government like Pradhan Mantri Awaas Yojana/Credit Linked Subsidy Scheme would not be eligible for benefit of concessional GST rate of 1% unless it satisfies the criteria of affordable residential apartment being carpet area of 60/90 square meters and consideration upto Rs. 45 Lakhs. Therefore, the benefit of concessional GST rate of 1% is admissible for apartments constructed under specified housing schemes only for ongoing projects even if the criteria of carpet area and consideration is not satisfied.
The other important questions will be discussed in our next update.
This is solely for the educational purpose.
You can reach us at www.capradeepjain.com, at our facebook page on
https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/ as well as follow us on Twitter at https://www.twitter.com/@capradeepjain21

GST UPDATE ON FAQ’S RELEASED ON REAL ESTATE AMENDMENTS PART-11:-

In earlier update, we have discussed about some of the important FAQs pertaining to the recent amendments made for real estate sector given vide Circular No. 354/32/2019-TRU dated 07.05.2019. In the present update, we seek to discuss some more clarifications issued by the aforementioned circular.
Question no. 17:Someone booked a flat from XYZ Developers in June, 2018. As of 31-03-2019, he had paid 40 % of the value of the flat. What shall be the GST rate applicable on the remaining portion of value of the flat?
Answer:GST on the remaining portion of the value of flat payable to the promoter on or after 01-04-2019 as per the contract between the promoter and buyer shall be payable at effective rate of 1% or 5%, subject to the condition that the builder has not exercised the option to pay tax on construction of apartments at the old rates of 12% or 18%. If the XYZ developer exercises option to continue to pay tax at old effective rate of 8% or 12% by 10th May, 2019, then GST has to be paid @ 8% or 12% on remaining portion of the value of the flat; in such cases, the promoter would be entitled to permissible credit of input taxes and, as such, the price that he charges from the buyer should appropriately reflect this credit.

The above clarification indicates that GST is to be charged by the developer as per statutory provisions in force irrespective of the agreement entered into by the developer and the buyer.

Question No. 18:I am a beneficiary of PMAY- CLSS and carpet area of my house being constructed in an ongoing project is 150 sqm. Am I eligible for new rate of 1% on same?

Answer: You are eligible for new GST rate of 1%, subject to the condition that the developer-promoter with whom you have booked the house has not exercised option to pay tax on construction of apartments at the old rate of 8%.

The above clarification supports the view taken by us in our GST Update on Real Estate Sector Part-5 wherein we had mentioned that the definition of ‘affordable residential apartment’ given in the notification no. 03/2019-Central Tax (Rate) dated 29.03.2019 includes apartment being constructed in an ongoing project under any of the specified housing schemes, in respect of which promoter has not exercised option to pay central tax on construction of such apartments at the old rates. Consequently, apartments constructed under any of the specified housing schemes of the government such as Credit Linked Subsidy Scheme with respect to an ongoing project will be eligible for concessional GST rate of 1% applicable for affordable residential apartments irrespective of the fact that the said apartments do not satisfy the criteria of carpet area of 60/90 square meters and consideration upto Rs. 45 Lakhs. However, after amendment made vide notification no. 03/2019-Central Tax (Rate) dated 29.03.2019, the commencement of new project under any of the specified housing schemes of the government like Pradhan Mantri Awaas Yojana/Credit Linked Subsidy Scheme would not be eligible for benefit of concessional GST rate of 1% unless it satisfies the criteria of affordable residential apartment being carpet area of 60/90 square meters and consideration upto Rs. 45 Lakhs. Therefore, the benefit of concessional GST rate of 1% is admissible for apartments constructed under specified housing schemes only for ongoing projects even if the criteria of carpet area and consideration is not satisfied.
The other important questions will be discussed in our next update.
This is solely for the educational purpose.
You can reach us at www.capradeepjain.com, at our facebook page on
https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/ as well as follow us on Twitter at https://www.twitter.com/@capradeepjain21

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