Rate on construction contract in JDA

[deepak gulati]

Dear Expert

What will be the applicable GST rate in case of construction of residential building where one floor is awarded to builder against consideration of such construction services:-

1) 12% - applicable to single residential unit

2) 18% - residual rate

[Himansu Sekhar]

It is 18%

[deepak gulati]

Sir

can you please elobrate the reasons for 18%

[Himansu Sekhar]

Please refer to sl

No.11 of the faq issued vide f.No. 354/32/2019-TRU dated 07.05.19 whete in the rates are provided.

[KASTURI SETHI]

The querist is talking of applicability of GST rate @12% or 18% to single residential unit in the scenario explained by him. I am also of the same view as explained by Sh.Himansu Sekhar Ji.

It is a barter agreement between the two persons. There is no difference between 'cash' and 'kind' regarding the receipt of consideration. When 100 flats are constructed by any construction company, neither lower rate nor exemption is available to single(individual) residential flat except the various options given in F.No. 354/32/2019-TRU dated 07.05.19 affordable/non-affordable etc. The same analogy is applicable here. Single individual residential flat (unit) cannot be segregated for the purpose of benefit of lower rate of GST.It is a business and will be taxed cumulatively. The element of 'individuality' (individual/single unit) is lost/absorbed in the construction of more than one flats.

[KASTURI SETHI]

The following decision of AAR, Karnataka reported as 2019 (30) GSTL 371 (AAR-GST) is relevant here. Applicant : Teamview Developers LLP (Advance Ruling No.104/2019 dated 30.9.19) = 2019 (10) TMI 1020 - AUTHORITY FOR ADVANCE RULING, KARNATAKA

AI Summary

GST on construction contracts: barter consideration for flats attracts the residual GST rate under issued FAQs. The construction exchange is treated as a barter business supply; a single residential flat within a larger project cannot be segregated for a concessional GST rate, and the transaction falls to the residual GST rate as set out in the government FAQs distinguishing affordable and non affordable scenarios.