GST on Residential Project

[Kaustubh Karandikar]

As per the Notification, the GST Rate for Construction of affordable residential apartments by a promoter in a Residential Real Estate Project is 1.5% (0.75 + 0.75). However, under commentaries in the Taxmann website and many other places, it is mentioned as 1% (0.5 + 0.5). Please guide.

[Amit Agrawal]

Both things are correct, if taken from angle of generally followed trade practices of expression.

The actual tax-rate of 1.5% becomes effective rate of 1% of total consideration once you reduce 'deemed value of one third of the total consideration for such supply' towards the 'value of transfer of land or undivided share of land' so as to arrive at 'value of construction services for payment of gst'.

In other words, 2/3 (1.5%) = 1%.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Kaustubh Karandikar]

Thanks Amit Sir for yur quick and accurate guidance.

[Padmanathan KV]

In my humble opinion, the correct rate of tax is 1.5% (0.75% + 0.75%). However, since 1/3 abatement is given to the land value, the effective rate will be 1%.

For disclosure in returns, the value after abatement of land must be under declared under 1.5% rate

[Shilpi Jain]

Agreed. The rate of tax is actually 1.5% and the deduction of 1/3rd given is only in the valuation.

This is the manner in which the disclosure should also be made in the returns. Many times it is seen that the taxpayers disclose rate of tax as 1% and 5% instead of 1.5% and 7.5% for affordable and other than affordable residential projects

[Amit Agrawal]

I agree with Ms. Shilpi Mam that for disclosure under GST records / submissions, tax-invoices etc., tax-payer should disclose tax-rate @ 1.5% or 7.5% (& not 1% or 5%), as the case may be and taxable value as ''2/3 of 'total consideration which includes land'' (& not 100% of 'total consideration which includes land).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Though my post at serial number 1 states the same thing, it is better to give further clarity for better understanding for everyone.

[Kaustubh Karandikar]

thanks amit ji and shilpi ji for your support as always

AI Summary

GST rate for residential construction: nominal rate should be disclosed though effective rate reduces after land abatement.
The nominal GST rate for construction of residential apartments is 1.5% (0.75% + 0.75%). A one third abatement of total consideration is applied to attribute value to land, producing a lower effective tax burden when computed on the abated value. For compliance, taxpayers should disclose the nominal rate in invoices and returns and declare the taxable value as two thirds of the total consideration after the one third land abatement.