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Rate of tax— sale of Flats to the prospective buyers—Pradhan Mantri Awas Yojana—Composite works contract service.
In the instant case, the question before authority is as follows:
- What is the rate of tax to be levied on the sale of Flats/ Units to the prospective buyers? And whether registration of project under Pradhan Mantri Awas Yojana is required?
- What is the rate of tax to be levied by the supplier from whom we will received Composite works contract service (Inward Supply of composite works contract)? Will it be 12% or 18%?
- Admissibility of Input tax credit. Whether full ITC is allowable or it will be restricted to output GST liability?
Held that—1) The applicant's case is covered under the tax rate of 12%, under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended since the project undertaken by them falls under the definition of “Affordable Housing” as stated by them in the application (Whether the housing project qualifies as affordable housing project or not, shall be determined by the applicant as per the definition of affordable housing given in the above mentioned notification.) The benefit of reduced rate would be available to them only in the cases of supply effected after 25.012018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued.
2) At the time of hearing it was communicated to them that this question can only be raised by the supplier and not by them and they agreed to the same and the question is therefore not answered in this case.
3) The builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats - The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act.
Ruling—The rate of tax to be levied is 12% (8% GST after deducting value of land) in case of Affordable Housing Project. If the project qualifies as an Affordable Housing Project, then registration under Pradhan Mantri Awas Yojana is not required to avail this benefit - The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act.[AUTHORITY FOR ADVANCE RULING, MAHARASHTRA][ THE IDEAL CONSTRUCTION] 4 TAXLOK.COM 50 (AAR-Maharashtra)