GST on Real Estate Transactions/ Affordable Housing
The GST council has extended the final date of embracing the rate of GST on Real Estate from 10.05.2019 to 20.05.2019. The Developers/ Promoters are given a one-time choice to opt to continue with the present slab of GST on Real Estate or the brand new rates applicable w.e.f 01.04.2019.
On its 34th meeting held on 19.03.2019, the GST council has recommended implementing GST on Real estate transactions w.e.f 01.04.2019 @1% for affordable housing and @5% for non-affordable housing. If no option is exercised by the developers within 20th May 2019, by default the new rates would be applicable with no input tax credit. However, if the builder opts the new rates of GST, he must then refund the GST on the advanced amount received from the buyer in terms of passing on the ITC benefit to the customer.
⇒GST on Real Estate Transactions-Affordable & Non-Affordable Housing
Key points on GST on Real Estate Transactions w.e.f 01.04.2019
⇒Some relevant questions on GST on real estate transactions with examples:
#2. Does a promoter or a builder has the option to pay tax at old rates of 8% & 12% with ITC?
#3. What is the rate of GST applicable on the construction of commercial apartments such as shops, godowns, offices, etc. ?
|Types of Apartments||New Rate of GST applicable from 01.04.2019|
|Construction of commercial apartments in a Residential real estate project commenced on or after 01.04.2019||5% on total consideration without ITC|
|Construction of commercial apartments in other than Residential real estate project commenced on or after 01.04.2019||12% on total consideration with ITC|
#4. Does the promoter have an option to pay GST @8% or rate of 12% with ITC for projects which commenced on or after 01.04.2019?
The answer is NO. For projects which commenced on or after 01.04.2019, the promoter has to comply with the new rates @1% or 5% without input tax credit /ITC depending upon the affordable housing condition.
#5. I booked a flat from ABC Developers in Jan 2019. As of 31-03-2019, I paid 30% of the value of the flat. What shall be the GST rate applicable on the remaining portion of the value of the flat?
#6. I have already paid a tax of 12% (effective) on installments paid before 01.04.2019. I wish to get the benefit of new rates of GST on real estate @1% or 5%. Whether it is the builder or the buyer who has the option to pay tax at the new or old rates?
#7. I have booked a residential property as on 31.01.2019 with an amount of Rs. 20 Lakhs. After, 01.04.2019 I decided to cancel the booking. How the GST on real estate paid would be adjusted after 01.04.19?
In this case, if you decide to cancel the booking after 01.04.2019, the GST paid by the developer before 31.03.2019 @12% i.e. 2.40 Lakh would be adjusted by the developer within September from the end of the financial year by issuing a Credit Note. Also, the GST so paid on the cancel booking would be adjusted against GST liability to be paid @1% or 5% after 01.04.2019 provided the developer refunded the full amount to the customer. This decision of GST refund is really very helpful for the middle-class section.
#8. I booked a residential property before 01.04.2019 at old rates. Now to save GST, I decided to cancel the booking and rebooked after 01.04.2019 at new rates. What will happen?
If any residential property is booked prior to 01.04.219 by paying GST at the old rates of 8% or 12% up to 31.03.2019 with ITC and is cancelled later on and rebooked at new rates of GST @1% or 5% without ITC or sold after issuance of the completion certificate, the input tax credit on supply of input services taken up to 31.03.2019 is to be reversed accordingly.
#9. I bought an apartment at Kolkata after 01.04.2019 having a carpet area of 70 sqm (753.47 Sq. Ft)and is priced 46 lakhs. What is the rate of GST applicable on the construction of this apartment?
⇒Final words on GST on real estate transactions
GST on Real Estate Transactions w.e.f 01.04.2019 at a glance
- New effective rates of GST @1% or 5% is applicable for projects commencing on and from 01.04.2019;
- No ITC or input tax credit is allowed for new rates @1% or 5% w.e.f 01.04.2019;
- For ongoing projects which have not been completed till 01.04.2019, the developer has to choose the one time option for old or new GST rates within the extended scheduled time of 20.05.2019;
- For affordable housing with a carpet area of 60 & 90 Sqm for metropolitan and Non-metropolitan cities respectively and consideration up to 45 Lakhs, the applicable GST rate is 1% without ITC;
- The buyer does not have any option or authority to choose the GST rates i.e. old or new for any projects;
- Construction of commercial apartments in a Residential real estate project commenced on or after 01.04.2019, applicable GST is 5% on total consideration without ITC;
- Construction of commercial apartments in other than Residential real estate project commenced on or after 01.04.2019, applicable GST is 12% on total consideration with ITC.
- The residential apartment booked before 01.04.2019 and GST paid at the old rate of 8% or 12% but cancelled after 01.04.2019- GST paid can be adjusted provided the promoter refunded the amount to the customer.
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