Real estate GST rate and valuation: post-2019 villa construction gets notified rates, with mandatory one-third land abatement and plot sales outside GST.
Promoter-led villa construction and redevelopment projects commencing on or after 01.04.2019 fall within the amended real estate GST entries, so the applicable rate is 1.5% for affordable residential apartments and 7.5% for other residential apartments, subject to the notification conditions. For valuation, the land component must be taken as one-third of the total amount charged, making the taxable value two-thirds, and actual land value cannot replace the statutory abatement. Sale of developed plots, where no buyer-specific development service or advance is received, remains a sale of land outside GST under Schedule III.
Issues: (i) Whether construction of villas by the applicant from 01.04.2019 and in redeveloped projects commencing after that date is taxable at 1.5% for affordable residential apartments and 7.5% for residential apartments other than affordable residential apartments; (ii) whether the taxable value of such construction service is to be taken at two-thirds of the total amount charged by allowing one-third deduction towards land value; (iii) whether sale of developed plots after land development, without advance or development activity undertaken for buyers, attracts GST.
Analysis: The applicable real estate GST structure introduced from 01.04.2019 under Notification No. 11/2017-Central Tax (Rate), as amended, applies to construction of affordable residential apartments and residential apartments other than affordable residential apartments in a residential real estate project by a promoter. The villas constructed by the applicant fall within the relevant descriptions, and the redevelopment projects undertaken after 01.04.2019 do not take the activity outside the notified entries. The valuation provision in paragraph 2 of the notification expressly deems the value of land or undivided share of land to be one-third of the total amount charged where the supply involves transfer of land or undivided share of land. The clarification relied upon confirms that actual land value is not deductible in place of the deemed one-third abatement. As to developed plots, where the applicant merely develops land and sells the plots without receiving advances for development activity for buyers, the transaction remains a sale of land and is covered by Schedule III.
Conclusion: The applicant is liable to GST at 1.5% for affordable residential apartments and 7.5% for other residential apartments in the villa and redevelopment projects, subject to the conditions in the notification.
Issue: Whether the taxable value of the villa construction service is to be reduced by one-third towards land value.
Analysis: Paragraph 2 of Notification No. 11/2017-Central Tax (Rate), as amended, governs valuation for the relevant construction services and deems the land component to be one-third of the total amount charged. The statutory method is mandatory and is not displaced by any actual land value shown in the agreement or otherwise.
Conclusion: The applicant is entitled to deduct one-third of the total amount charged and the taxable value is to be taken at two-thirds of the total amount charged.
Issue: Whether sale of developed plots after development, without any advance or buyer-specific development activity, is liable to GST.
Analysis: The activity described is a sale of developed land/plots and not a taxable construction service for buyers. Sale of land is excluded from the scope of supply under Schedule III, and on the facts stated no separate taxable development service is shown to have been provided to the buyers.
Conclusion: Such sale of developed plots is not liable to GST.
Final Conclusion: The ruling accepts the applicant's position on the applicable concessional real estate tax rate, the deemed one-third land deduction for valuation, and the non-taxability of sale of developed plots as land transactions.
Ratio Decidendi: In a promoter-led residential project covered by the post-01.04.2019 real estate GST entries, tax is chargeable at the notified rate on construction service and valuation must follow the statutory one-third land abatement, while a mere sale of developed land remains outside GST under Schedule III.
TaxTMI 
AI Drafter ✕
TaxTMI 
