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

Clarifying GST Rate for Affordable Housing: Officially 1.5% but Effectively 1% Due to Land Abatement Disclosure. A discussion on the Goods and Services Tax (GST) rate for affordable residential apartments in a Residential Real Estate Project reveals a discrepancy between the official rate and common interpretations. Officially, the GST rate is 1.5% (0.75% + 0.75%), but due to a 1/3 abatement for land value, the effective rate is considered 1%. Participants agree that for disclosure purposes, the rate should be stated as 1.5% to reflect the actual calculation basis. The conversation emphasizes the importance of correct disclosure practices in GST records and tax invoices.