Revolutionary Changes are made in GST for the Real Estate Sector.

 ITC has been abolished for the residential segment with no option to pay GST at a higher rate and claim ITC. The revised scheme applies to residential and commercial apartments which are covered under RERA. The provisions do not apply to the construction of single houses or works contracts not covered under RERA. 

 

"Promoter" shall have the same meaning as assigned to it in section 2(zk) of RERA Act, 2016 [RERA]. The new scheme is compulsory for projects commenced on or after 1-4-2019. In respect of on-going projects as on 31-3-2019, the promoter has the option to shift to the new scheme w.e.f. 1-4-2019 (without ITC) or continue under earlier scheme (with ITC).

 

Under new scheme, the effective GST rates for residential apartments are as follows –

(a) CGST 0.5% plus SGST 0.5% (total 1%) or IGST 1% (without ITC) for affordable residential apartments,

(b) CGST 2.5% plus SGST 2.5% (total 5%) or IGST 5% (without ITC) for other residential apartments.

 (c) In respect of commercial apartments (shops, offices, godowns, etc.) in RREP, the GST rate is CGST 2.5% plus SGST 2.5% (total 5%) or IGST 5% (without ITC).

(d) In respect of the construction of commercial apartments (other than RREP), the GST rate is CGST 6% plus SGST 6% (total 12%) or IGST 12% (with ITC).

 

These rates apply where the supply of services involves the transfer of land or an undivided share of land, and its charges are included in the amount charged to the customer. REP – Real Estate projects can cover both residential and commercial apartments (shops, offices, godowns).

 

A commercial apartment means other than a residential apartment. RREP means REP with commercial apartments not more than 15% of total carpet area  & balance residential apartments. Common buildings are not ‘commercial apartments’.

 

Affordable Residential Apartment means apartment having carpet area not exceeding 60 square meters in metropolitan cities or 90 square meters in cities or towns other than metropolitan cities and for which the gross amount charged is not more than Rs. 45 lakhs.

 

In the case of ongoing projects as on 1-4-2019, the promoter has the option to opt for earlier provisions of tax i.e. with the utilization of ITC. If the promoter intends to continue under the old scheme, he has to submit a declaration in the specified form to the jurisdictional Commissioner before 20-5-2019. If the promoter does not submit such declaration, he is deemed to have opted for the new scheme. In the case of ongoing projects, if the promoter intends to shift to a new scheme w.e.f. 1-4-2019, he is required to refund excess ITC availed as on 31-3-2019 or get the credit of ITC less claimed as on 31-3-2019. ¡ In respect of new projects, the GST shall be paid in cash by debiting the electronic cash ledger only without utilising Input Tax Credit.