9911796707
TMI BlogSeeks to amend notification published as per S.R.O. No. 370/2017 so as to notify CGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said notification,- (i) in the opening paragraph, (a) after the word, brackets and figures conferred by sub-section (1), , the word, brackets and figures sub-section (3) and sub-section (4) shall respectively be inserted; (b) the word and after the words and figures sub-section (5) of section 15 shall be substituted by the symbol , ; (c) after the word, brackets and figures section (16) , the words and figure and section 148 shall be inserted; (ii) in the Table,- (a) against serial number 3, for item (i), and the entries relating thereto in column (3), (4) and (5), the following items and entries shall be substituted, namely:- TABLE (3) (4) (5) (i) Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (hereinafter referred to as RREP) which commences on or after 1st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay state tax on construction of apartments at the rates as specified for item (ie) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oter who transfers the land or development rights or FSI to a developer- promoter for construction of apartments and receives constructed apartments against such transferred rights and sells such apartments to his buyers independently. Provided also that eighty percent of value of input and input services, [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used in supplying the service shall be received from registered supplier only; Provided also that inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person; Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the project, whichever is earlier) falls short of the said threshold of 80 per cent, tax shall be paid by the promoter on value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 3.75 (ib) Construction of commercial apartments (shops, offices, godowns etc.) by a promoter in an RREP which commences on or after 1st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay state tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, 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. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 3.75 (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019, option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; Provided also that invoices for supply of the service can be issued during the period from 1st April, 2019 to 10th May, 2019 before exercising the option, but such invoices shall be in accordance with the option to be exercised.; (if) Construction of a complex, building, civil structure or a part thereof, including,- (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay state tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arpet area of all the apartments in the project; Provided also that for the purpose of determining whether the apartments at the time of supply of the service are affordable residential apartments covered by sub- clause (a) of clause (xvi) of paragraph 4 below or not, value of the apartments shall be the value of similar apartments booked nearest to the date of signing of the contract for supply of the service specified in the entry in column (3) relating to this item; Provided also that in case it finally turns out that the carpet area of the affordable residential apartments booked or sold before or after completion, for which gross amount actually charged was forty five lakhs rupees or less and the actual carpet area was within the limits prescribed in sub-clause (a) of clause (xvi) of paragraph 4 below, was less than 50 per cent of the total carpet area of all the apartments in the project, the recipient of the service, that is, the promoter shall be liable to pay such amount of tax on reverse charge basis as is equal to the difference between the tax payable on the service at the applicable rate but for the rate prescribed herein and the tax actually pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This entry is to be taken to apply to all services which satisfy the conditions prescribed herein, even though they may be covered by a more specific chapter, section or heading elsewhere in this notification. 9 ,, ; (iii) in paragraph 2,- (a) for the words, brackets, letters and figures 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), the word, brackets, letters and figures (i), (ia), (ib), (ic), (id), (ie) and (if) shall be substituted; (b) in the Explanation, after the words this paragraph the words and paragraph 2A below shall be inserted; (iv) after paragraph 2, the following paragraph shall be inserted, namely:- 2A. Where a registered person transfers development right or FSI (including additional FSI) to a promoter against consideration, wholly or partly, in the form of construction of apartments, the value of construction service in respect of such apartments shall be deemed to be equal to the Total Amount charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after 1st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form to pay state tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees. For the purpose of this clause,- (i) Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their respective geographical limits prescribed by an order issued by the Central or State Government in this regard; (ii) Gross amount shall be the sum total of,- A. Consideration charged for the services specified at item (i) and (ic) in column (3) against serial number 3 in the Table; B. Amount charged for the transfer of land or undivided share of land, as the case may be including by way of lease or sub lease; and C. Any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019; (d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019. Explanation .-For the purpose of sub-clause (a) and (b) above, construction of a project shall be considered to have started on or before the 31st March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019. (xxi) commencement certificate means the commencement certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan; (xxii) development works means the external development works and internal development works on immovable property; (xxiii) external development works includes roads and road systems landscaping, water supply, sewage and drainage systems, electricity supply transformer, sub-station, sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttributable to construction of residential portion in a real estate project (REP) other than residential real estate project (RREP), which has time of supply on or after 1st April, 2019, shall be calculated project wise for all projects which commence on or after 1st April, 2019 or ongoing projects in respect of which the promoter has not exercised option to pay state tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, in the prescribed manner, before the due date for furnishing of the return for the month of September following the end of financial year 2018-19, in the following manner: 1. Where % completion as on 31st March, 2019 is not zero or where there is inventory in stock (a) Input tax credit on inputs and input services attributable to construction of residential portion in a REP, which has time of supply on or after 1st April, 2019, may be denoted as Tx. Tx shall be calculated as under: Tx=T-Te Where,- (i) T is the total ITC availed (utilized or not) on inputs and input services used in construction of the REP from 1st July, 2017 to 31st March, 2019 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow instead of the manner prescribed in (b) above,- Te shall be calculated as under: Te = Tc + T1 + Tr Where,- Tc is the ITC attributable to construction of commercial portion in the REP, calculated as under: Tc =T3 * (carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP); Wherein,- 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 and Tr is the ITC attributable to construction of residential portion in the REP which has time of supply on or before 31st March, 2019 and which shall be calculated as under: Tr = (T3 + T2)* F1 * F2 * F3* F or Tr = (T- T1)* F1 * F2 * F3* F4 (d) The amounts Tx and Te shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax. (e) Where, Tx is positive, i.e. Te T, the registered person shall pay, by debit in the electronic credit ledger or electronic cash led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of supply on or before 31st March, 2019 may be denoted as Te which shall be calculated as under: Te = Tc + Tr Where,- Tc is the ITC attributable to construction of commercial portion in the REP, calculated as under: Tc =Tn* (carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP) and Tr is the ITC attributable to construction of residential portion in the REP which has time of supply on or before 31st March, 2019 and which shall be calculated as under: Tr = Tn* F1 * F2 * F3 Where,- Tn= 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 shall be the same as in para 1 above (b) The registered person shall be eligible to take ITC on goods and services received on or after 1st April, 2019 for construction of residential portion in the REP, for which he shall not otherwise be eligible, to the extent of the amount of Te. (c) The amount Te shall be computed separately for input tax credit of central tax, State tax, Union territo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5250 sqm 5 value of each residential apartment 0.60 crore 6 Total value of the residential apartments C2*C5 45.00 crore 7 No. of commercial apartments in the project 25 units 8 Carpet area of the Commercial apartments 30 sqm 9 Total carpet area of the Commercial apartments C7*C8 750 sqm 10 Total carpet area of the project (Resi + Com) C4+C9 6000 sqm 11 Percentage completion as on 31-3-2019 (as declared to RERA or determined by chartered engineer) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Eligible ITC (Te)=Tc +Tr C26+C20 0.592 crore 28 ITC to be reversed on transition, T x =T-Te C19-C27 0.408 crore *Note: - 1. The value of T at C19 has been estimated for illustration based on weighted average tax on inputs. 2. In actual practice, the registered person shall take 'aggregate of ITC taken as declared in GSTR-3B of tax period from 1-7-2017 or commencement of project which is later and transitional credit taken under Section 140 of CGST Act' as value of T. Illustration 2 Sl.No. Details of a REP (Res + Com) A B C D 1 No. of apartments in the project 100 units 2 No. of residential apartments in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to transition C14*C15 14.40 crore 17 ITC to be reversed on transition, Tx=T-Te 18 Eligible ITC (Te)=Tc +Tr 19 T(*see notes below) 1 crore 20 Tc=Tx (carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP) C19*(C9/C10) 0.125 crore 21 Tx=TXF1XF2XF3XF4 22 F1 C4/C10 0.875 23 F2 C13/C4 0.533 24 F3 C16/C14 0.600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 Total value of supply of residential apartments having t.o.s. prior to transition C33 10.80 crore 41 consideration received 8.00 crore 42 Total value of supply of residential apartments having t.o.s. prior to transition after application of cap vis-a-vis- consideration received 8Cr + 25% of 8 Cr 10.00 crore 43 F3 after application of both the caps C42/C14 0.42 44 Tr=TXF1XF2XF3XF4 (after application of both the caps) C19*C22*C23 *C24*C25 0.97 45 Eligible ITC (Te)=Tc +Tr (after application of both the caps) cC0+C44 1.10 46 ITC to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential Real Estate Project, value of F 1 shall be 1.) Total carpet area of residential and commercial apartment booked on or before 31st March, 2019 F 2 = Total carpet area of the residential and commercial apartment in the RREP Such value of supply of construction of residential and commercial apartments booked on or before 31st March, 2019 which has time of supply on or before 31st March, 2019 F 3 = Total value of supply of construction of residential and commercial apartments booked on or before 31st March, 2019 (F 3 is to account for percentage invoicing of booked residential apartments) F 4 = 1 % Completion of construction as on 31st March, 2019 Illustration : where one- fifth (twenty per cent) of the construction has been completed, F4 shall be 100 20 = 5. Explanation : % Completion of construction as on 31st March, 2019 shall be the same as declared to the Real Estate Regulatory Authority in terms of section 4 and section 11 of Real Estate (Regulation and Development) Act, 2016 (Central Act 16 of 2016) and where the same is not required to be declared to the Real Estate Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as on 31st March, 2019 is zero but invoicing has been done having time of supply before 31st March, 2019, and no input services or inputs have been received as on 31st March, 2019, Te shall be calculated as follows:- (a) Input tax credit on inputs and input services attributable to construction of residential and commercial portion in an RREP, which has time of supply on or before 31st March, 2019 may be denoted as Te which shall be calculated as under, Te = Tn* F1 * F2 * F3 Where,- Tn= Tax paid on such inputs and input services on which ITC is available under the CGST Act, received in 2019-20 for construction of residential and commercial apartments in the RREP. F1, F2 and F3 shall be the same as in para 1 above (b) The registered person shall be eligible to take ITC on goods and services received on or after 1st April, 2019 for construction of residential or commercial portion in the RREP, for which he shall not otherwise be eligible, to the extent of the amount of Te. (c) The amount Te shall be computed separately for input tax credit of Central Tax, State Tax, Union Territory Tax and Integrated Tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea of the residential apartments C2*C3 7000 sqm 5 value of each residential apartment 0.60 crore 6 Percentage completion as on 31-3-2019 (as declared to RERA or determined by chartered engineer) 20% 7 No. of apartments booked before transition 80.00 units 8 Total carpet area of the residential apartment booked before transition C3*C7 5600.00 sqm 9 Value of booked residential apartments C5*C7 48.00 crore 10 Percentage invoicing of booked residential apartments on or before 31-3-2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D 1 No. of apartments in the project 100 units 2 No. of residential apartments in the project 100 units 3 Carpet area of the residential apartment 70 sqm 4 Total carpet area of the residential apartments C2*C3 7000 sqm 5 Value of each residential apartment 0.60 crore 6 Percentage completion as on 31-3-2019 (as declared to RERA or determined by chartered engineer) 20% 7 No. of apartments booked before transition 80.00 units 8 Tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) C6+25% 45% 25 Total value of supply of residential apartments having t.o.s. prior to transition C9*C24 21.60 crore 26 F3 after application of cap C25/C9 0.45 27 Te=T X F1 X F2 X F3 X F4 (after application of cap) C14*C15* C16*C26* C18 1.8 crore 28 ITC to be reversed/taken on transition, T X =T-Te (after application of cap) C14-C27 -0.8 crore 29 Tax after application of cap on % invoicing vis-a-vis-Pc and Payment realisation 30 % invoicing after application of cap (Pc + 25%) 45% 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 N 3 Steel 20 Y 4 Bricks 15 Y 5 Flooring tiles 10 Y 6 Paints 5 Y 7 Architect/ designing/ CAD drawing etc. 10 Y 8 Aluminium windows, Ply, commercial wood 15 Y In this example, the promoter has procured 80 per cent of goods and services [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], from a GST registered person. However, he has procured cement from an unregistered supplier. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], for construction of a residential real estate project during a financial year. Sl. No. Name of input goods and services Percentage of input goods and services received during the financial year Whether inputs procured from registered supplier? (Y/ N) 1 Sand 10 N 2 Cement 15 N 3 Steel 15 Y 4 Bricks 10 Y 5 Flooring tiles 10 Y 6 Paints 5 Y 7 Architect/designing/ CAD drawing etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Declaration 1. I hereby exercise the option to pay tax on construction of apartments in the above mentioned project as under: I shall pay tax on construction of the apartments: [put ( ) in appropriate box] At the rate as specified for item (ie) or (if), against serial number 3 in the Table in this notification, as the case may be At the rate as specified for item (i) or (ia) or (ib) or (ic) or (id), against serial number 3 in the Table in this notification, as the case may be 2. I understand that this is a one time option, which once exercised, shall not be allowed to be changed. 3. I also understand that invoices for supply of the service can be issued during the period from 1st April 2019 to 10th May 2019 before exercising the option, but such invoices shall be in accordance with the option being exercised herein. Signature ___________________ Name ______________________ Designation _________________ Place __________________ Date __________________ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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