The works contract service for the construction of dwelling units in the project named 'Akriti' are affordable residential apartments are taxable @12%
Works contract— In the instant case, The applicant is the promoter of residential real estate project, supplying construction service in developing a residential housing project named “Akriti” in Burdwan. The applicant wants to know whether Entry No. 3(v)(da) of Notification 11/2017-Central Tax (Rate) dated 28/06/2017 (hereinafter the Rate Notification), as amended time to time, applies to the works contract service received from the contractors.
Entry No. 3(v)(da) of the Rate Notification is related to the construction of low-cost apartments. Clause 4(xvi) of the Rate Notification defines an affordable residential apartment. It shall mean a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing project in respect of which the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3, having carpet area not exceeding 60 sqm in metropolitan cities or 90 sqm in cities or towns other than metropolitan cities and for which the gross amount charged is not more than 45 lakh.
According to the Project Plan submitted at the time of the hearing, FAR for the entire project is 2.749 after deducting from the total built-up area the common areas like lift-lobby, stair area etc. FAR for the affordable residential apartments in the project should, therefore, be at least 1.375. The total plot size being 5627 sqm, the built-up area for affordable residential apartments should at least be 7734 sqm. The built-up area for the affordable residential apartments, as identified by the architect, under the RREP is 7885 sqm (the calculation sheet is attached). The relevant FAR, therefore, comes out to be 1.401, which is 50.96% of the FAR for the project. The RREP, therefore, is an affordable housing project in terms of the AHP Notification.
Held that— The works contract service for the construction of those dwelling units in the project named 'Akriti' that are affordable residential apartments in terms of clause 4(xvi) of Notification No.11/2017-Central Tax (Rate) dated 28/06/2017, as amended time to time, are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in Entry No. 3(ie) or 3(if).