GST on construction services

[Ashish Diwedi]

We have entered into contract with a society for redevelopment of 7 floors and additionally 3 floors where -

(i) Each flat owner will get additional 250 sqft of area in addition to the existing area of 1000 sq ft

(ii) Apart from these the developer will develop 3 floors for sale to outsiders.

(iii) Existing Flat owners will get monthly compensation for relocation

A. Will the transaction be considered as Works contract service or construction service?

B. What shall be the rate of GST?

C. On what value GST will be payable?

D. Will there be GST only on additional area given to existing flat owners or on the entire area constructed?

E. Will GST be applicable on relocation charges

AI Summary

GST on Redevelopment Projects: Works Contract Service at 5% Rate, Includes Relocation Charges with Development Services. A discussion on the application of GST to a redevelopment project involving a society and a developer was initiated. The project includes redevelopment of 7 floors and construction of 3 additional floors for sale, with flat owners receiving extra space and relocation compensation. The main queries addressed were whether the transaction is a works contract or construction service, the applicable GST rate, the value on which GST is payable, and if GST applies to relocation charges. It was clarified that it is a works contract service with a 5% GST rate on the entire constructed area, and relocation charges are bundled with development services.