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TMI BlogFAQs (Part II) on real estateX X X X Extracts X X X X X X X X Extracts X X X X ..... an Ongoing Project , whether an option of 1% or 5% (without ITC) vis- -vis 8% or 12% (with ITC) as prescribed in Notification No. 3/2019 can be exercised by the Developer Promoter and Landowner-Promoter independently? The legal and operational harmony necessitates that both the Landowner-Promoter and the Developer-Promoter exercise identical option for a project. 2. In case of an area sharing arrangement between a Landowner-Promoter and a Developer-Promoter in a New Project undertaken on or after 1/4/2019, whether the new rate of 1% or 5% is applicable in case of the Landowner-Promoter who sells the under-construction premises before completion of the project? Will the Landowner-Promoter be entitled to ITC in respect of tax charged to him by the Developer-Promoter on such supply? Whether the Landowner-Promoter shall be entitled to avail ITC on any other services or goods used by him in furtherance of his business (such as brokerage on sales etc.)? The new effective rates of 1% and 5% without ITC are applicable to the apartments booked by the land owner promoter in an ong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure. 5. In 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)? The 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. 6. In an area sharing model, a promoter has to handover constructed flats/ apartments to the land owner who supplied TDR for the project. Value of TDR at the time when the landowner transferred it to the promoter is not known. How would the promoter determine GST on TDR? Value of TDR, shall be equal to the amount charged by the promoter for similar apartments from the independent buyers booked on the date that is nearest to the date on which such devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slum dwellers in redevelopment project or slum rehabilitation project are given by the promoter against consideration received by them in the form of TDR/ FSI/ monetary consideration from the original inhabitants in case of redevelopment projects and from the Government in case of slum rehabilitation projects. 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. Wherever 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. 9. In 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? In case of ongoing project in respect of which the promoter has opted for new rates of 1% / 5%, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The affordable residential apartment should not have a carpet area exceeding 60 sqm in metropolitan cities and 90 sqm in other places. Will the internal walls of the apartment, balcony or verandah be included 60/90 sq meter? Carpet area is defined in clause (k) of section 2 of the RERA, 2016 and the same has been adopted in the notification. 12. If an un-registered person transfers development right to a developer-promoter, then it is apparently not covered by the fourth proviso applicable to clause (i) to clause (id) of serial 3 of Notification No. 11/2017 (as amended). Will the promoter be liable to pay GST on TDR received from an unregistered land owner? Promoter shall be liable to pay GST on TDR transferred by any person whether registered or not on RCM basis. 13. Whether the ITC availed as per the second 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%? No. GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices shall be included in the value of supplies from unregistered persons while calculating 80% threshold? Yes. Inward supplies of exempted goods / services shall be included in the value of supplies from unregistered persons while calculating 80% threshold. 19. Whether 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? No. 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 No.11/2017-CTR dated 28.06.2017 as amended by Notification No. 3 / 2019-CTR dated 30/03/2019, transactions by way of grant of development rights, long term lease, FSI etc. are not required to be included in the value of Input and Input Services for evaluation of criteria of 80% from registered persons. 20. When a developer prefers the option of paying tax at 1%/ 5%, without ITC, for an ongoing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 16 (2), shall be applicable for reversal of input tax credit ? The apartments given to the Land Owner Promoter are given by the Developer Promoter against consideration received by him in the form of TDR from the Land Owner Promoter. Therefore, the payment by Land Owner Promoter for service of construction of apartments received from the Developer Promoter is made even before the service is provided. Therefore, Land Owner Promoter 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. 25. Whether 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? The exemption is available only on TDR/ FSI transferred on or after 1 st April, 2019 for construction of resident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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