GST under Affordable housing project

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GST under Affordable housing project

GST under Affordable housing project

(The Ideal Construction-AAR)

 

Facts of the case:

  • The ideal construction is a partnership firm carrying business of builders and developers. firm is that of builders and developers. The said firm desirous to undertake an affordable housing project in Kolhapur. The Land required for the project is already possessed by the Firm. The firm is currently in the process of designing and planning for the said project. The units to be constructed in the said project will be of Up to 30 sqmtrs (EWS) or upto 60 sqmtes(LIG).
  • The present application has been filed under section 97 of the central Goods and services Tax Act, 2017 and the Maharashtra Goods and services Tax Act 2017 {hereinafter referred to as “the CGST Act and MGST Act”} by THE IDEAL CONSTRUCTION, the applicant, seeking an advance ruling in respect of the following questions:
  1. 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?
  2. What is the rate of tax to be levied by the supplier from whom we will receive Composite GST liability?

Held:

On the basis of following observations judgment has been passed

  • The application has Submitted that on the land already in possession with them, they are proposing to construct unit which will be of upto 30 square meters {Economically weaker Section (EWS) houses} or upto 60 sq. miters {Lower Income Group (LIG) houses.

  • According to sub item (da) of item iv, “a civil structure or any other original works pertaining of the “Economically weaker Section (EWS) houses” construeted under the Affordable Housing in partnership by state or Union territory or local authority or urban development  authority  under the Housing for all ( Urban) Mission / Pradhan Mantri Awas Yojana (Urban) Would attract a tax rate of 12%. This clause will not be applicable to the applicants because the same envisages partnership by state or Union territory or local authority or urban Development authority

  • According to sub item (db) in item v “a civil structure or any other original works pertaining of the “houses constructed or acquired under the credit Linked subsidy scheme for Economically weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group -1 (MIG-1) Middle Income Group-2 (MIG-2) ” under the Housing for all (Urban) Mission/Pradhan Mantri Awas Yojana (Urban) . This clause also shall not be applicable to the applicant since this clause states that the houses should be constructed or acquired under the Credit Linked Subsidy Scheme of the Government.
  • According to sub item (da) of item (v), “low-cost houses up to a carpet area of 60 square meters par house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic affairs vide F. No. 13/6.2009-INF, Dated the 30th March, 2017 would attract a tax rate of 12%. This clause will be applicable to the applicant if the project undertaken by them is an affordable housing project which has been given infrastructure status vide Government of India notification mentioned above.

  • According GST Council in its 25th meeting held on 18th January 2018 at Delhi was to extend the concessional rate of 12% (8% GST after deducting value of land) to services by way of construction of low cost houses up to a carpet area of 60 sq miter in a housing project which has been given infrastructure status under notification No. 13/06/2009. Dated 30th March, 2009

  • This Recommendation would extend the concessional rate to construction of flats/ houses of less them 60 sq miter in projects other than the projects covered by any scheme of the Central of state Government also. The GST council has also observed that ” It may be recalled that all inputs used in and capital goods deployed for construction of flats, houses, etc attract GST of 18% or 28%. As Against this most of the housing projects in the affordable segment in the country would now attract GST of 8%

  • As a result, the builders 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 GST council has also mentioned that the builders / developers are expected to follow the principles laid down under section 171 of the GST Act (Anti-Profiteering Rules) scrupulously.

  • Thus, rate of tax to be levied is 12% (8% GST after deducting value of land) in case of Affordable Housing Project. If project qualifies as an Affordable Housing Project, then registration under Mantri Awas Yojna is not required to avail this benefit.

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