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TMI Blog2023 (1) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... EP). Applicable GST rate on affordable residential apartment, other residential apartment and commercial shop - HELD THAT:- The consideration of Rs. 45 Lacs as mentioned in the Notification in case of Affordable Residential Apartment is the gross amount which includes all types of charges collected from the potential buyer except Stamp Duty payable. We find that the applicant have not submitted any legal documents to ascertain that the which types of charges makes exact gross amount of the affordable residential flat which are collected from the customer. The applicant has not submitted the types of heads under which consideration have been received and make Gross Amount of the affordable Residential Flat less than 45 lacs - Similarly, the applicant have not submitted any legal documents in support of exact carpet area and consideration recovered from the customer in respect of other than affordable residential flat and commercial shops. The applicant have not submitted sufficient documents to decide the Ruling on the question sought for, therefore we are not inclined to pronounce the Ruling in absence of proper documents. The ruling can be pronounced on the basis of proper documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above notification the term "affordable residential apartment" has been defined as a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing in respect of which the promoter has not exercised option in the prescribed form to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial no.3, as the case may be, having carpet area not exceeding 60 square meters in metropolitan cities and 90 square meters in cities or town other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees. b. As per entry no. of the above notification, applicable rate of tax is 1% in case of construction of affordable residential apartments by a promoter in a Residential Real Estate Project. c. Hence if any apartment/flat/duplex/unit in a project which fulfills the definition of "affordable residential apartments" will be chargeable to tax @ 1% irrespective of the fact that other units of the same projects are non-affordable residential apartments which are chargeable to tax @ 5%. There is no bar in the provision for charging different tax rates in the same project wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed after 01/04/2019 is also defined in the said notification and it shall mean "a residential apartment in a project which commences on or after 01/04/2019 having a carpet area not exceeding 60 square meter in metropolitan cities or 90 square meters in cities or town other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees. 9. As per the said notification the terms "Real Estate Project" & "apartment" shall have same meaning as assigned to it in section 2(zn) & section 2(e) of the Real Estate (Regula i and Development) Act, 2016 respectively. 10. As per section 2(zn) of the RERA 2016, "Real Estate Project (REP)" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto; 11. As per section 2(e) of the RERA 2016, "ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as follows: (i) As per item (i) of Sr. no. 3 in the table of notification no. 03/2019-CT (Rate) dated 29.03.2019, Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (RREP) which commences on or after 1st April, 2019 Will attract central tax as per above Notification and shall be paid in cash subject to other conditions laid down in the notification supra. (ii) The Residential Real Estate Project (RREP) has been defined in clause (xix) of para 4 of notification no. 0312019 as, "the term 'Residential Real Estate Project (RREP)' shall mean a project 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." (iii) As per section 2(zn) of the Real Estate (Regulation and Development) Act, 2016 Real Estate Project means- (zn) "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fordable residential apartment without ITC, 5% without ITC for other than residential affordable apartment and 5% without ITC for commercial shops. 18. Now, we proceed to decide whether the project is a Residential Real Estate Project (RREP) or Real Estate Project (REP). The term Real Estate Project (REP) and Residential Real Estate Project (RREP) has been defined in clause (xviii) and (xix) respectively of Notification No. 3/2019-CT (Rate) dated 29-3-2019. Clause (xviii) and (xix) are reproduced as under: (xviii) The term Real Estate Project (REP) shall have the same meaning as assigned to it in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016). Clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) is read as under: (zn) "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of percentage carpet area of commercial shops comes to 10.49% of Total Carpet Area 7407 Sq. Mtr of the project. The carpet area of commercial shops is less than 15% of total carpet area of Apartment and commercial shops, hence the applicant project covers under the definition of RREP. 19. We find that the applicant is developing buildings consisting of apartments and commercial shops for the purpose of selling. The instant project, shall be treated as RREP if the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP. Here, as discussed in Para 18.2 we find that instant project having commercial shop carpet area less than 15% of total carpet area considering the submission of the applicant. As a result, the instant project falls under the category of Residential Real Estate Project (RREP). 20. Now, we proceed to decide applicable GST rate on affordable residential apartment, other residential apartment and commercial shop. 20.1 The applicant has argued that they have constructed the affordable residential apartments having carpet area below 90 Sq. Mtr. and cost of the apartment is below 45 lakh. To decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r only; (iv) Inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person (v) 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 of input and input services comprising such shortfall at the rate of eighteen percent on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017) shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both; (vi) In case cement is received from an unregistered person, the promoter shall pay tax on supply of such cement at the applicable rates on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017), shall apply to him as if he is the person liable for paying the tax in relation to such supply of cement; (vii) The promoter shall mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferential location charges, development charges, parking charges, common facility charges etc 20.5 Further, in this regard CBIC has issued FAQ (Part 11) on real estate on 14' May 2019 wherein Q. No. 4 has clarified the following : Q. No. 4 For the purpose of determining the threshold of Rs.45 lakhs in case of "affordable residential apartment", whether the following charges generally recovered by the developer from the buyer shall be included? • Amenity Charges • Society formation charges • Advance maintenance • Legal Charges Ans. For the purpose of determining the threshold of the gross amount of Rs.45.00 lakh for affordable residential apartments, all the charges or amounts charged by the promoter from the buyer of the apartments shall form part of the gross amount charged. Clause xvi, sub-clause (a)(ii)(C) of paragraph 4 of notification No. 11/2017-CT(R) dated 28.06.2017, reproduced below, refers. "C. Any other amount charged by the promoter from the buyer of the apartment including preferential location charges, development charges, parking charges, common facility charges etc." However the value shall not include stamp duty payable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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