GST rates clarified for residential apartments: 1.5% for affordable, 7.5% for others. Rules for construction services explained.

The ruling determined that the applicant is required to pay GST at 1.5% for affordable residential apartments and 7.5% for other residential apartments, subject to specific conditions. The same GST rates apply to redeveloped projects undertaken after 01.04.2019. The taxable value for construction services is calculated by deducting one-third of the total amount charged as the deemed value of land. Additionally, the sale of developed plots without receiving any advance for development activities is not subject to GST.

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Issues Involved:
1. Applicable GST rate on the promotion of villa projects.
2. GST rate on redeveloped projects undertaken after 01.04.2019.
3. Calculation of taxable value for construction of villas.
4. GST applicability on the sale of developed plots.

Issue-wise Detailed Analysis:

1. Applicable GST Rate on Promotion of Villa Projects:
The applicant is engaged in the construction of villas and sought clarity on the GST rate applicable from 01.04.2019. As per Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019, the rate of GST for construction of affordable residential apartments is 1.5% (effective rate 1%) and for other residential apartments, it is 7.5% (effective rate 5%). The conditions for these rates include that the central tax must be paid in cash, input tax credit should not be taken except as prescribed, and a certain percentage of inputs and input services must be from registered suppliers.

2. GST Rate on Redeveloped Projects Undertaken After 01.04.2019:
The applicant also sought clarity on the GST rate for redeveloped projects started before 31.03.2019 but undertaken by them after 01.04.2019. The ruling states that the same rates of 1.5% for affordable villas and 7.5% for other villas apply, subject to the conditions mentioned in the notifications. The definition of "Real Estate Project" includes redevelopment projects, making them liable to the same GST rates as new projects.

3. Calculation of Taxable Value for Construction of Villas:
The applicant inquired about the method to calculate the taxable value for the construction of villas. As per Para 2 of Notification No. 11/2017-Central Tax (Rate), the taxable value is the total amount charged for the supply, less the deemed value of land, which is one-third of the total amount charged. This valuation mechanism is mandatory, and the actual value of land cannot be deducted. The CBIC FAQ clarifies that the developer must use the deemed value of land for GST calculation.

4. GST Applicability on Sale of Developed Plots:
The applicant queried whether GST is applicable when they buy land, develop it, and sell the developed plots without collecting any advance for development activities. As per Schedule III of the CGST Act, the sale of land is neither a supply of goods nor a supply of services. Therefore, the sale of developed plots without receiving any advance from customers for development activities is not liable to GST.

Ruling:
1. The applicant is liable to pay GST at 1.5% for affordable residential apartments and 7.5% for other residential apartments, subject to the conditions prescribed.
2. The same GST rates apply to redeveloped projects undertaken after 01.04.2019.
3. The taxable value of construction services is calculated by deducting one-third of the total amount charged for the supply as the deemed value of land.
4. The sale of developed plots without receiving any advance for development activities is not liable to GST.

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