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Tax rate on real estate projects (Building, Flats etc.) w.e.f. 01.04.2019

Tax rate on real estate projects (Building, Flats etc.) w.e.f. 01.04.2019

GST Council in the 34th meeting held on 19th March, 2019 at New Delhi discussed the operational details for implementation of the recommendations made by the council in its 33rd meeting for lower effective GST rate of 1% in case of affordable houses and 5% on construction of houses other than affordable house. The council decided the modalities of the transition as follows.

S.No.

Period

particulars

Output tax arte

1.

Before 01.04.2019

Affordable housing segment

 

8%  after 1/3rd  abatement of value of land with ITC

2.

Before 01.04.2019

Other residential segment

12% after 1/3rd abatement of value of land with ITC

3.

w.e.f. 01.04.2019

Affordable housing segment

 

New rate of 1% without ITC provided fulfillment of condition specified

4.

w.e.f. 01.04.2019

Other residential segment

New rate of 5% without ITC provided fulfillment of condition specified

5.

Ongoing projects on  01.04.2019

affordable and other than affordable housing segment (ongoing)

on satisfaction of following condition—

(1) Construction of building must have started before  01.04.2019.

(2) Actual booking for the project must have started before 01.04.2019

(3) Option must be exercised within prescribed time frame.

 

 Option 1

Old tax rates  (8% and 12%) with ITC

Option 2

1% and 5%  tax rate without ITC

6.

w.e.f. 01.04.2019

Mixed project

If carpet area of commercial unit is not more than 15% of total carpet area, entire project will be treated as residential project.

New rate of 5% without input tax credit

 Affordable house— all houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in metros / 90 sqm in non- metros and value upto RS. 45 lakhs) and

Conditions for the new tax rates:

The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions,-

(a) Input tax credit shall not be available,

(b) 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.

New rate of 5% without input tax credit shall be applicable on construction of

(a) all houses other than affordable houses in ongoing projects whether booked prior to or after 01.04.2019. In case of houses booked prior to 01.04.2019, new rate shall be available on instalments payable on or after 01.04.2019.

(b) all houses other than affordable houses in new projects.

(c) commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is not more than 15% of total carpet area of all apartments.