GST rate wef 1.4.2019

[hubert fernandes]

With regard to the recent notification ie 3/2019 dated 29.3.19 (central tax rate) please advice us as whether on new projects commencing after 01.04.2019 the Builder can levy GST at 9% as per old rate and Avail ITC credit vis a vis Rule 42 as amended via notification 16/2019 dated 29.03.2019 ? OR whether Notification 3/2019 dated 29.3.19 prescribes a mandatory rate of adapting 3.75% with no input tax credit.

Please advise us on the basis of Notification 3/2019 dated 29.03.2019 read with Rule 42 as amended

 

[CASusheel Gupta]

It is mandatory to charge 3.75% with no ITC.

Please refer to explanation given after entry no. (ii)(b)(f) of the notification 3/2019 which read as below

"Explanation. - For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id), (ie) and (if) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry.”;

As per this explanation the entry no. (f) which levies GST @ 9% cannot be used if the construction activities are specifically covered under any previous entry.

CA Susheel Gupta

9811004443

[SHARAD ANADA]

By Notification 3/2019 dated 29.3.19 (central tax rate), Notification No.11/2017- Central Tax (Rate), dated the 28thJune, 2017 against serial number 3, for item (i), and the entries relating thereto in column (3), (4) and (5), the following items and entries shall be substituted.

So 9% entries are substitued by new entries. Hence 9% option for new project after 01.04.2019 is not applicable but 1.5% or 7.5% i.e effective rate after considering land value as 1/3 of total value will be 1% and 5%

AI Summary

GST rate applicability changed: substituted rate entries now govern construction supplies and bar input tax credit. The substituted central tax entries introduced by the 2019 notification prevent application of prior rate entries for construction supplies specifically covered by new entries; consequently the substituted rates govern tax treatment and disallow input tax credit where the explanatory clause and amended valuation and credit rule apply, and earlier rate options are not available for projects commencing after the effective date.