Question
I have some queries as follows:-
1) a developer having land and taken permission of construction as affordable
housing project. now he gives the construction contract to another person.
query:- what will be rate of gst that contractor will charge to the developer in
his contract invoice 12 % or 18% ?? with notification or circular and effective
date
Answer
Facts of the case:
A developer has given a contract for construction of affordable housing to a
contractor. Rate of GST to be charged by Contractor 12% or 18%.
Law Applicable:
Notification No. 11/2017-Central Tax (Rate)
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(v ) Composite supply of works contract as
defined in clause (119) of section 2 of the Central Goods and
Services Tax Act, 2017, other than that covered by items (i), (ia), (ib),
(ic), (id), (ie) and (if) above supplied by way of construction,
erection, commissioning, or installation of original works pertaining
to,- (a) railways, including monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low - cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area 60 square metres per house in a housing project approved by the competent authority under - (1) the 'Affordable Housing in Partnership' component of the Housing for All (Urban) Mission /Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government ; (da) low-cost houses up to a carpet area of 60 square metres per 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 (e) post - harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages. |
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Interpretation:
The same is also clarified vide Press Release dated 07/05/2019 FAQs on real
estate reproduced below:
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What shall be the classification of and rate of tax applicable to works
contract service provided by a contractor to a developer or promoter under
the new dispensation effective from 01-04-2019 for (a) New project after 1.4.2019 and ongoing projects where option has been exercised for new rate and (b) Ongoing projects where option has not been exercised for new rate'
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The rate of tax applicable on the work contract service provided by a contractor to a promoter for construction of a real estate project shall be 12% or 18% depending upon whether such work contract service is provided for construction of affordable residential apartments or residential apartments other than affordable residential apartments. Rate of tax applicable on such work contract service provided by a contractor to a promoter onconstruction of commercial apartments shall be 18%(irrespective of option exercised by developerpromoter).The relevant entries of the notification are at items (iv), (v), (va) and (vi) against sl. no. 3 of the table in Notification No. 11/2017-Cenral Tax (rate) dated 28-06-2017 prescribing rate of 12% for works contract services of construction of affordable apartments/ apartments being constructed under schemes specified therein. In case of works contract services for construction of other apartments, rate of 18% as prescribed in item (xii) against sl. no. 3 of the table in Notification No. 11/2017-Cenral Tax (rate) dated 28-06-2017 shall be applicable. |
Conclusion:
The contractor will charge from Developer tax @ 12% for construction
contract of affordable housing. (Reply dt.08/06/2019)