Department Of Revenue Issues FAQs On GST In Real Estate: Key Highlights

You have booked a flat in the last fiscal year and now decides to cancel the booking, are you eligible for GST refund? Or, you have bought a house last year and paid almost 40 percent of the value by March 31, 2019, what will be the rate of GST applicable on the remaining portion of your flat value?

To answer these and many more such queries, Department of Revenue, Ministry of Finance on May 7 released a compilation of ‘Frequently Asked Questions’ pertaining to the real estate sector. The FAQs on GST in real estate have been issued to clear the confusion over the migration of tax rates, which permits the real estate players to shift to 5 percent GST rate for residential units and 1 percent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.

Here are the main highlights of FAQs on GST in real estate issued by Department Of Revenue:

  • For the ongoing projects, builders have been given the option to either continue in 12 percent GST slab with ITC (8 percent for affordable housing) or opt for 5 percent GST rate (1 percent for affordable housing) without ITC.
  • A developer will be able to issue a ‘Credit Note’ to the buyer as per provisions of Section 34 in case of a change in price or cancellation of the booking.
  • Affordable residential apartment is 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 opted for new rate of 1 percent (effective from 01-04-2019) having carpet area up to 60 square meters in metropolitan cities and 90 square meters in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than forty-five lakhs rupees.
  • With regard to purchase of land from owner by the developer commonly termed as Transfer of Development Right (TDR), GST would not apply on agreements entered into on or after April 1, 2019.
  • For TDR agreements entered into prior to April 1, 2019, the developer will not be able to claim credit for the GST already paid.
  • All towers registered as different projects under RERA will be treated as distinct projects, for which the builder will have to maintain separate books of accounts.
  • A promoter shall purchase at least eighty percent of the value of input and input services, from registered suppliers. If the value of purchases as prescribed above from registered supplier is less than 80 percent, a promoter has to pay GST @ 18% on reverse charge basis on all such inward supplies (to the extent short of 80% of inward supplies from registered supplier).

Click here to download the complete FAQs on GST in real estate.


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