There are major changes occurred in 2019 for the real estate sector under GST. Here is a list of top answered questions on input tax credit under GST
These answers are updated as and when the latest news comes on real estate business. The real estate agents in India must read this top answers to know the latest compliance under GST for t
Here are the top answered questions:
1. What is GST rate on Real Estate for the construction of residential apartments?
The GST rate on real estate for Construction of affordable residential apartment is 1% without an input tax credit. Whereas Construction of
2. What is GST rate on commercial apartment like shops, godowns and offices in Real estate project?
From 01.04.2019, the GST rate on commercial apartments after the deduction of
- Residential Apartment @5% without ITC
- Other than residential apartment @12% for ongoing project only.
3. What is Residential Real Estate project?
A Residential real estate project is a project where the carpet area of the
commercial apartments is not more than 15% of the total carpet area of all the apartments in the existing project.
4. Who has to pay GST on TDR and floor space index?
The promoter has to to pay GST on TDR(Transfer of Development Rights) or FSI(floor space index) supplied on or after 01-04-2019 on reverse charge basis to the government.
5. What is GST rate on transfer of development rights, FSI and long term lease of land?
The projects that are booked before the issue of completion certificate or first occupation are exempted, hence there is no tax to be charged.
However, the projects that remain un-booked on the date of issue of completion certificate or first occupation, will attract GST at the rate of 18%, but the amount of tax shall be limited to1% or 5% of value of apartment depending upon whether the residential apartments for which such TDR or FSI is used, in the affordable residential apartment category or in other than affordable residential apartment.
Further, TDR or FSI or long term lease of land used for the construction of commercial apartments shall attract GST of 18%. This will be applicable to supply of TDR or FSI or long term lease of land used in the new projects where the new rate of 1% or 5% is applicable.
6. When the promoter shall discharge its tax liability on supply of long term lease?
On long term lease received on or after 1.4.2019, the promoter shall discharge his tax liability as below:
In case of supply of long term lease of land for construction of commercial apartments, tax shall be paid by the promoter immediately.
However, liability to pay tax on the upfront amount payable for long term lease shall arise on the date of issuance of Completion Certificate for construction of residential apartment.
7. When the promoter shall discharge its tax liability on FSI and its addition?
The promoter shall discharge his tax liability on FSI received on or after 1.4.2019, are as under:
(i) In case of supply, of FSI wherein consideration is in the form of construction of commercial or residential apartments, liability to pay tax shall arise on the date of issuance of Completion Certificate.
(ii) In case of supply, of FSI wherein monetary consideration is paid by promoter, liability to pay tax shall arise on the date of issuance of Completion Certificate only if such FSI is relatable to the
However, liability to pay tax shall arise immediately if such FSI is relatable to
8. When shall the promoter discharge tax liability on TDR?
The liability to pay GST on Transfer of development rights shall arise on the date of completion or first occupation of the project, whichever is earlier.
Thus, the promoter shall be liable to pay tax on the reverse charge basis, on the supply of TDR on or after 01-04-2019, which is attributable to the residential apartments that remain un-booked on the date of issuance of the
9. Whether an option of 1% or 5% as per notification no. 3/2019 can be exercised by the Developer- Promoter and Landowner- Promoter independently?
yes, both the Landowner-Promoter and the Developer-Promoter exercise identical option for a project. This is In case of an area sharing arrangement between a Land owner-Promoter and a Developer-Promoter. Where the Project qualifies to be considered an “Ongoing Project”, (without ITC) vis-à-vis 8% or 12% (with ITC).
10. Is it mandatory to fulfill the conditions of payment of tax, in case a developer choose new tax rate @ 5%/1%?
Yes. All the specified conditions against clause (i) to (id) of Sl. No 3 of Notification No. 11/2017-CTR are mandatory incase a developer go for new rate i.e 5%/1%. Some of these conditions are:
- Payment of tax through Cash Ledger,
- Payment of tax under RCM subject to 80% limit,
- Non-availing of Input Tax Credit,
- Rreversal of credit,
- Maintenance of project wise account,
- Reporting of ITC not availed in corresponding GSTR-3B etc.
More Articles on Real Estate
- GST on Real Estate in India
- Composition scheme for Real Esate
- Revise GST Rate for Real estate
- GST impact on Construction
- Reverse charge update on Real Estate
Know GST update status, exclusively at GST India News portal. For example, you can get the latest GST
