GST - Apartment Promoters

[Ethirajan Parthasarathy]

As per Notification No.3/2019 (Central Tax - Rate), new rate of GST has been prescribed. This applies to a 'promoters'. As per this notification, the meaning of promoter is the same as defined under RERA. Sec.2(zk) defines the term 'promoters'. As per the 'explanation' given at the end of the section, if the person who construct the apartment & the person who sells the apartment are different, both of them shall be deemed to be the promoters for the purpose of RERA.

This means a person who is acting as 'contractor' for the developers also become a promoter & is covered by notification no.3/2019. Hence, I feel even the 'contractor' has to charge 1% or 5% GST without ITC.

However, I find the said notification has entry (v) providing for 12% GST for pure 'contractor' who renders service to a promoters. There appears to be conflict of meaning.

Experts please give your comments

[Alkesh Jani]

Sir,

In this regards, my point of view is that, In the said Notification terms Landowner – promoter and Developer promoter is given, as per the normal trade practice, both enters into an agreement, while “contractor” does not falls within the above, as the said contractor constructs the civil structure on direction or on behalf of any one of the above. So I do not find any ambiguity in the matter.

Views from our experts is highly solicited.

Thanks,

With Regards,

[KASTURI SETHI]

I support the views of Sh.Alkesh Jani Ji. In this context, read the decision of AAR, Delhi reported as 2018 (10) TMI 1054 - AUTHORITY FOR ADVANCE RULING , NEW DELHI - Applicant :NBCC India Ltd wherein the contractor has held as an agent who worked for and behalf of Ministry of Housing and Urban Affairs, Govt. of India. The issue of 'promotor' has been discussed in detail. The applicant is registered as Promotor under Section 2 (zk) of Real Estate Regulation Act, 2016,

AI Summary

Promoter definition expands to potential contractor inclusion, raising GST classification conflict between promoter and contractor treatments. The issue is whether contractors who build apartments are encompassed by the RERA-derived promoter definition for GST, which would require application of the promoter-specific GST treatment without input tax credit, versus an alternative GST entry treating standalone contractors as service providers; contributors argue respectively for inclusion based on the RERA explanation and for exclusion based on contractors acting as agents for promoters, citing an advance ruling supporting the agent characterisation.