Tax rate on sale of Flats in affordable housing projects clarified by ruling. Input Tax Credit eligibility explained.

The ruling clarified that the tax rate on the sale of Flats/Units in affordable housing projects is 12% (8% GST after deducting the value of land). Registration under Pradhan Mantri Awas Yojana is not required if the project qualifies as an Affordable Housing Project. The applicant is eligible for Input Tax Credit subject to fulfilling conditions under the GST Act. The question regarding the tax rate on inward supply of composite works contract service was not answered as it should be raised by the supplier.

---

---

Issues Involved:
1. Rate of tax on the sale of Flats/Units to prospective buyers and the requirement of registration under Pradhan Mantri Awas Yojana.
2. Rate of tax on inward supply of composite works contract service.
3. Admissibility of Input Tax Credit (ITC).

Issue-wise Detailed Analysis:

1. Rate of Tax on Sale of Flats/Units and Registration Requirement:
The applicant sought clarity on the tax rate applicable to the sale of flats/units in an affordable housing project and whether registration under Pradhan Mantri Awas Yojana (PMAY) is necessary. The relevant notifications, including Notification No. 11/2017-Central Tax (Rate) and its amendments, were examined.

The ruling clarified that:
- The tax rate applicable is 12% (8% GST after deducting the value of land) for affordable housing projects.
- The project qualifies as an Affordable Housing Project if it meets the criteria defined in the notification by the Ministry of Finance, Department of Economic Affairs, which includes using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with a carpet area of not more than 60 square meters.
- Registration under PMAY is not required to avail the concessional tax rate if the project qualifies as an Affordable Housing Project.

2. Rate of Tax on Inward Supply of Composite Works Contract Service:
The applicant queried the tax rate applicable to the inward supply of composite works contract services from a registered supplier. During the hearing, it was communicated that such a question could only be raised by the supplier, not by the applicant. Consequently, this question was not answered.

3. Admissibility of Input Tax Credit (ITC):
The applicant inquired about the admissibility of ITC and whether it would be restricted to the output GST liability. The ruling referred to Sections 16 to 20 of the GST Act, which govern ITC eligibility and conditions. The GST Council's recommendations from its 25th meeting were also considered, emphasizing that builders/developers should not recover GST from buyers if they have sufficient ITC to cover the output GST.

The ruling concluded that:
- The applicant is eligible for ITC subject to the fulfillment of conditions prescribed under the GST Act.

Order:
- Question 1: The tax rate on the sale of Flats/Units is 12% (8% GST after deducting the value of land) for Affordable Housing Projects. Registration under PMAY is not required if the project qualifies as an Affordable Housing Project.
- Question 2: Not answered as the question should be raised by the supplier.
- Question 3: The applicant is eligible for ITC subject to the fulfillment of conditions prescribed under the GST Act.

---