CONSTRUCTION AND READY-TO-MOVE-IN PROPERTY
GST RATE OF TAX APPLICABLITY
The Goods and Services Tax
Act, 2017 came into force in India with effect from 1.7.2017.
Under
GST Regime, Services provided by way of pure labour contracts of construction,
erection, commissioning, installation, completion,
fitting out, repair, maintenance, renovation, or alteration of a civil
structure or any other original works pertaining to the beneficiary-led
individual house construction or enhancement under the Housing for All (Urban)
Mission or Pradhan Mantri Awas Yojana, and Services by way of pure labour
contracts of construction, erection, commissioning, or installation of original
works pertaining to a single residential unit otherwise than as a part of a
residential complex are NIL rated.
Construction
of a complex, building, civil structure or a part thereof, intended for sale to
a buyer, wholly or partly (the value of land is deemed to be one-third of the
total amount charged for such supplies) will attract 12% with no refund of accumulated
ITC, and Composite supply of Works contract as defined in clause 119 of section
2 of CGST Act will attract 18% GST with full ITC.
The
Central Government has clarified that there is no GST applicable on
ready-to-move-in or completed property as per CGST Act, 2017 for which
completion certificate has been issued in earlier tax regime and in such cases
the buyers are liable to pay 4.5% service tax applicable on the invoices raised
or consideration paid before 1.7.2017. (State Taxes will be applicable for that
period).
Payment
made by the buyer to the builder on or after 1.7.2017 against invoices issued
on or after 1.7.2017 shall attract GST at the rate of 12%.
The
Central Government has also clarified that no GST payable on such property even
if the construction is completed after 1.7.2017 for the under construction
property when entire consideration paid to the builder before 1.7.2017 and in
such cases only service tax at the rate of 4.5% will be applicable and no GST.