07-Sep-2022 GST on Real Estate transactions in India
real-estateAs regards builders / promoters, there is a mixed reaction in the real estate industry with the RERA Act coming into full force.
OVERVIEW:
As regards builders/promoters, there is a mixed reaction in the real estate industry with the RERA Act coming into full force. The development has brought the builders/promoters into action for making requisite financial arrangements to comply with the provisions of the Act. The builders/promoters are now restructuring their real estate projects to meet the requirements of the Act more effectively and proposing to treat each building as a different phase for the registration process.
APPLICABLE GST RATES IN REAL ESTATE:
The Summary of New Rates (CGST + SGST) applicable for such construction services in case of New Projects (commencing on or after 1st April, 2019 ) & Ongoing Projects in respect of which the promoter has not exercised the option of paying taxes at the old rates is as under :
| Sr. No. | Nature of Construction Service | Rate of Tax | 1/3rd Deduction for Land | Effective Rate of Tax | ITC Available |
| 1 | ‘Affordable Residential Apartment’ in REP/RREP (area 60 sqm in metros / 90 sqm in non-metros and value upto Rs. 45 lakhs) | 1.5% | 0.5% | 1% | No
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| 2 | Ongoing Specified Low Cost – Affordable Housing Projects under the existing Central/State Govt. Housing Schemes | 1.5% | 0.5% | 1% | No |
| 3 | Residential Apartments Other than ‘Affordable Residential Apartment’ in REP/RREP | 7.5% | 2.5% | 5% | No |
| 4 | Commercial Apartments (in an RREP) | 7.5% | 2.5% | 5% | No |
| 5 | Commercial Apartments (in a Residential Project other than in an RREP) | 18% | 6% | 12% | Yes – Proportionate ITC |
| 6 | Commercial Apartments in a Commercial Project | 18% | 6% | 12% | Yes |
Summary of New Rates (CGST + SGST) applicable for such construction services in case of New Projects (commencing on or after 1st April, 2019 ) & Ongoing Projects in respect of which the promoter has not exercised the option of paying taxes at the old rates:
| Item. No. | Nature of Construction Service | Rate of Tax | 1/3rd Deduction for Land | Effective Rate of Tax | ITC Available |
| i | ‘Affordable Residential Apartment’ in RREP | 0.75% + 0.75% = 1.50% | 0.5% | 1% | No |
| ia | Residential Apartments Other than ‘Affordable Residential Apartment’ in RREP | 3.75% + 3.75% = 7.50% | 2.5% | 5% | No |
| ib | Commercial Apartments (in an RREP) | 3.75% + 3.75% = 7.50% | 2.5% | 5% | No |
| ic | ‘Affordable Residential Apartment’ in REP (other than RREP) | 0.75% + 0.75% = 1.50% | 0.5% | 1% | No |
| id | Residential Apartments Other than ‘Affordable Residential Apartment’ in REP (other than RREP) | 3.75% + 3.75% = 7.50% | 2.5% | 5% | No |
We have been advising companies in Real Estate with Accounting, GST Advisory, GST legal periodic compliances, GST Audit, even in fundraising, etc. for more than 15 years.
APMH specializes also in fundraising advisory and in the Insolvency and Bankruptcy IBC code advisory for the real estate sector.