TaxTMI 
TaxTMI 
REGISTERED WITH RERA- VILLA HOUSE TYPE APARTMENT CONSTRUCTIONS - IF THE PROMOTER/BUILDER APPOINTED A UN REGISTERED SUB CONTRACTOR FOR PURE LABOUR FOR CONSTRUCTING THE HOUSES- WHETHER GST PAYABLE UNDER RCM OR NOT? THE BUILDER IS PAYING TAXES UNDER Notification No. 3/2019, 1 OR 5% - PLEASE CLARIFY
WORKS CONTRACT
14 Jan 2023 
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Reverse charge mechanism applies where unregistered subcontractors cause shortfall in registered inputs, making promoter liable for tax.
Construction services for a residential complex performed by an unregistered subcontractor are not covered by the single-unit pure labour exemption. Where a promoter uses inputs or input services from unregistered persons such that procurement from registered suppliers falls below the prescribed threshold, the promoter must pay tax on the shortfall under the reverse charge mechanism at the applicable rate; the reverse charge applies only to the extent the unregistered sourcing exceeds the allowable shortfall and services for the complex remain taxable. (AI Summary)
Construction services for a residential complex performed by an unregistered subcontractor are not covered by the single-unit pure labour exemption. Where a promoter uses inputs or input services from unregistered persons such that procurement from registered suppliers falls below the prescribed threshold, the promoter must pay tax on the shortfall under the reverse charge mechanism at the applicable rate; the reverse charge applies only to the extent the unregistered sourcing exceeds the allowable shortfall and services for the complex remain taxable. (AI Summary)