GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-2

GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-2

In the earlier update, we had discussed the basic scheme announced vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. In the present update, we discuss the computations to be done as prescribed in Annexure I to the notification. Annexure I pertains to computation of input tax credit on inputs and input services attributable to the construction of residential portion in a Real Estate Project (REP) in case of ongoing project which has time of supply on or after 01.04.2019 and which is not to be taken by the developer. It also seeks to compute input tax credit attributable for construction of residential portion in REP in case where the project commences on or after 01.04.2019.

Where % completion as on 31^st March, 2019 is not zero or where there is inventory in stock

Where % completion as on 31^st March, 2019 is zero but invoicing has been done having time of supply before 31^st March, 2019 and no input services or inputs have been received as on 31^st March, 2019

Te= Tc + Tr
Te means total eligible credit
Tc means ITC attributable to construction of commercial portion in REP which is calculated as follows:-
Tc = T* (Carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
Tr means ITC attributable to construction of residential portion in the REP which has time of supply on or before 31^st March, 2019 calculated as follows:-
Tr= T * F1* F2* F3* F4
T is the total ITC availed (utilised or not) on inputs and input services used in construction of the REP from 1^st July, 2017 to 31^st March, 2019 including transitional credit taken on 1^st July, 2017.
F1= Carpet area of residential apartments in REP/Total carpet area of commercial and residential apartments in the REP
F2= Total carpet area of residential apartment booked on or before 31^st March, 2019/Total carpet area of the residential apartment in REP
F3= Such value of supply of construction of residential apartments booked on or before 31^st March, 2019 which has time of supply on or before 31^st March, 2019/Total value of supply of construction of residential apartments booked on or before 31^st March, 2019
F4= 1/% completion of construction as on 31^st March, 2019.
ALTERNATE CALCULATION OF Te
Te= Tc+T1+Tr
Tc is the ITC attributable to construction of commercial portion in the REP calculated as
Tc=T3* (carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
T3= T-(T1+T2)
T1= ITC attributable exclusively to construction of commercial portion in the REP
T2= ITC attributable exclusively to construction of residential portion in the REP
Tr is the ITC attributable to the construction of residential portion in the REP which has time of supply on or before 31.03.2019 and which shall be calculated as follows:-
Tr= (T3+T2) * F1*F2*F3*F4

Te= Tc + Tr
Te means total eligible credit
Tc means ITC attributable to construction of commercial portion in REP which is calculated as follows:-
Tc = Tn* (Carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
Tr means ITC attributable to construction of residential portion in the REP which has time of supply on or before 31^st March, 2019 calculated as follows:-
Tr= Tn * F1* F2* F3
Tn means tax paid on such inputs and input services on which ITC is available under the CGST Act received in 2019-20 for construction of REP.
F1, F2 and F3 are the same as discussed in column no. 1.

Te shall be determined in the following situations as under:

(i) where percentage invoicing is more than the percentage completion and the difference between percentage invoicing (per cent. points) and the percentage completion (per cent. points) of construction is more than 25 per cent. points; the value of percentage invoicing shall be deemed to be percentage completion plus 25 percent points;

(ii) where the value of invoices issued on or prior to 31st March, 2019 exceeds the consideration actually received on or prior to 31st March, 2019 by more than 25 per cent. of consideration actually received; the value of such invoices for the purpose of determination of percentage invoicing shall be deemed to be actual consideration received plus 25 percent. of the actual consideration received; and

(iii) where, the value of procurement of inputs and input services prior to 1st April, 2019 exceeds the value of actual consumption of the inputs and input services used in the percentage of construction completed as on 31st March, 2019 by more than 25 percent. of value of actual consumption of inputs and input services, the jurisdictional commissioner or any other officer authorized in this regard may fix the Te based on actual per unit consumption of inputs and input services based on the documents duly certified by a chartered accountant or cost accountant submitted by the promoter in this regard, applying the accepted principles of accounting.

Finally, the amount of input tax credit attributable to construction of residential portion in a REP which has time of supply on or after 01.04.2019 with respect to column no. 1 will be calculated as follows:-
Tx= T-Te
If the Tx is positive, Te < T, the registered person will pay the amount equal to difference between T and Te and such amount shall form part of the output liability of the registered person and furnished in ITC-03.
If the Tx is negative, Te > T, the registered person will be eligible to take ITC on goods and services received on or after 01.04.2019 for construction of residential portion in REP to the extent of difference between Te and T.
The above computation will be explained with the help of illustration in our next update.
This is solely for the educational purpose.
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GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-2

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