TaxTMI 
TaxTMI 
Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify UTGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.
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....ated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 702(E), dated the 28thJune, 2017, namely:- In the said notification, - (i) in the opening paragraph, (a) after the word, brackets and figures "conferred by sub-section (1),", the word, brackets and figures "sub-section (3) and sub-section (4)" shall respectively be inserted; (b) the word "and" after the words and figures "clause (iv)" shall be substituted by the symbol ","; (c) after the word, brackets and figures "clause (v)", the words and figure "and clause (xxvii)" shall be inserted; (d) the word "and" after the words and figures "sub-section (5) of section 15" shall be substituted by the symbol ","; (e) after the word, brackets and figures "section (16)", the words and figure "and section 148" shall be inserted; (ii) in the Table, - (a) against serial number 3, for item (i), and the entries relating thereto in column (3), (4) and (5), the following items and entries shall be substituted, namely, - Table (3) (4) (5) "(i) Construction of affordable residential apartments by a promoter in a Residential Real E....
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.... "developer- promoter" is a promoter who constructs or converts a building into apartments or develops a plot for sale, (ii) "landowner- promoter" is a promoter who transfers the land or development rights or FSI to a developer- promoter for construction of apartments and receives constructed apartments against such transferred rights and sells such apartments to his buyers independently. Provided also that eighty percent of value of input and input services, [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used in supplying the service shall be received from registered supplier only; Provided also that inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person; Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the ....
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....d, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 3.75 (ib) Construction of commercial apartments (shops, offices, godowns etc.) by a promoter in an RREP which commences on or after 1st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay Union Territory tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 3.75 (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised....
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....emed to have been exercised; Provided also that invoices for supply of the service can be issued during the period from 1st April 2019 to 10th May 2019 before exercising the option, but such invoices shall be in accordance with the option to be exercised.; (if) Construction of a complex, building, civil structure or a part thereof, including,- (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay Union Territory tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation. -For the removal of doubt, it is hereby clarified that, supply by way of services specified at items ....
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....of signing of the contract for supply of the service specified in the entry in column (3) relating to this item; Provided also that in case it finally turns out that the carpet area of the affordable residential apartments booked or sold before or after completion, for which gross amount actually charged was forty five lakhs rupees or less and the actual carpet area was within the limits prescribed in sub- clause (a) of clause (xvi) of paragraph 4 below, was less than 50 per cent. of the total carpet area of all the apartments in the project, the recipient of the service, that is, the promoter shall be liable to pay such amount of tax on reverse charge basis as is equal to the difference between the tax payable on the service at the applicable rate but for the rate prescribed herein and the tax actually paid at the rate prescribed herein"; e. in item (vi) in column (3), after the figures "2017", the words, brackets, and figures "other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above" shall be inserted'; f. in item (xii) in column (3), for the entry, the following entry shall be substituted, namely: - "(xii) Construction services othe....
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....nation, after the words "this paragraph" the words "and paragraph 2A below" shall be inserted; (iv) after paragraph 2, the following paragraph shall be inserted, namely, - "2A. Where a registered person transfers development right or FSI (including additional FSI) to a promoter against consideration, wholly or partly, in the form of construction of apartments, the value of construction service in respect of such apartments shall be deemed to be equal to the Total Amount charged for similar apartments in the project from the independent buyers, other than the person transferring the development right or FSI (including additional FSI), nearest to the date on which such development right or FSI (including additional FSI) is transferred to the promoter, less the value of transfer of land, if any, as prescribed in paragraph 2 above." (v) in paragraph 4 relating to Explanation, after clause (xii), the following clauses shall be inserted, namely: - "(xiii) an apartment booked on or before the 31st March, 2019 shall mean an apartment which meets all the following three conditions, namely- (a) part of supply of construction of which has time of supply on or before the 31st March....
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.... 3 of the Table above, in respect of which the promoter has not exercised option to pay Union Territory tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3 of the Table above, as the case may be." (xvii) the term "promoter" shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xviii) the term "Real Estate Project (REP)" shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xix) the term "Residential Real Estate Project (RREP)" shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP; (xx) the term "ongoing project" shall mean a project which meets all the following conditions, namely- (a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has....
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....social infrastructure such as educational health and other public amenities or any other work in a project for its benefit, as per sanctioned plans; (xxv) the term "competent authority" as mentioned in definition of "commencement certificate" and "residential apartment" , means the local authority or any authority created or established under any law for the time being in force by the Central Government or State Government or Union Territory Government, which exercises authority over land under its jurisdiction, and has powers to give permission for development of such immovable property; (xxvi) The term "carpet area" shall have the same meaning assigned to it in in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xxvii) the term "Real Estate Regulatory Authority" shall mean the Authority established under sub- section (1) of section 20 (1) of the Real Estate (Regulation and Development) Act, 2016 (No. 16 of 2016) by the Central Government or State Government; (xxviii) "project which commences on or after 1st April, 2019" shall mean a project other than an ongoing project; (xxix) "Residential apartment" shall mean an ap....
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....ction of residential portion, in the REP which has time of supply on or before 31st March, 2019; (b) Te shall be calculated as under: Te=Tc+Tr Where, - Tc is the ITC attributable to construction of commercial portion in the REP, calculated as under: Tc =T * (carpet area of commercial apartments in the REP/ total carpet area of commercial and residential apartments in the REP) and Tr is the ITC attributable to construction of residential portion in the REP which has time of supply on or before 31st March, 2019 and which shall be calculated as under, Tr= T* F1 * F2 * F3* F4 Where, - F1= Carpet area of residential apartments in REP ___________________________________________ Total carpet area of commercial and residential apartments in the REP F2 = Total carpet area of residential apartment booked on or before 31st March, 2019 _________________________________________________________________ Total carpet area of the residential apartment in REP F3 = Such Value of supply of construction of residential apartments booked on or before 31st March, 2019 w....
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....fference between T and Te. Such amount shall form part of the output tax liability of the registered person and the amount shall be furnished in ^4[FORM GST DRC- 03]. . Explanation: The registered person may file an application in FORM GST DRC- 20, seeking extension of time for the payment of taxes or any amount due or for allowing payment of such taxes or amount in installments in accordance with the provisions of section 80. The commissioner may issue an order in FORM GST DRC- 21 allowing the taxable person further time to make payment and/or to pay the amount in such monthly installments, not exceeding twenty-four, as he may deem fit. (f) Where Tx is negative, i.e. Te>T, the registered person shall be eligible to take ITC on goods and services received on or after 1st April, 2019 for construction of residential portion in the REP, for which he shall not otherwise be eligible, to the extent of difference between Te and T. (g) The registered person may calculate Tc and utilize credit to the extent of Tc for payment of tax on commercial apartments, till the complete accounting of Tx is carried out and submitted. (h) Where percentage completion is zero but ITC has been ....
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....lowing situations as under: (i) where percentage invoicing is more than the percentage completion and the difference between percentage invoicing (per cent. points) and the percentage completion (per cent. points) of construction is more than 25 per cent. points; the value of percentage invoicing shall be deemed to be percentage completion plus 25 percent. points; (ii) where the value of invoices issued on or prior to 31st March, 2019 exceeds the consideration actually received on or prior to 31st March, 2019 by more than 25 per cent. of consideration actually received; the value of such invoices for the purpose of determination of percentage invoicing shall be deemed to be actual consideration received plus 25 percent. of the actual consideration received; and (iii) where, the value of procurement of inputs and input services prior to 1st April, 2019 exceeds the value of actual consumption of the inputs and input services used in the percentage of construction completed as on 31st March, 2019 by more than 25 percent. of value of actual consumption of inputs and input services, the jurisdictional commissioner or any other officer authorized in this regard may fix the Te ba....
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....3 x F4 C19 * C22 * C23 * C24 * C25 0.467 crore 27 Eligible ITC (Te)=Tc + Tr C26 + C20 0.592 crore 28 ITC to be reversed on transition, Tx= T- Te C19 - C27 0.408 crore * Note:- 1. The value of T at C19 has been estimated for illustration based on weighted average tax on inputs. 2. In actual practice, the registered person shall take 'aggregate of ITC taken as declared in GSTR-3B of tax periods from 1.7.2017 or commencemnt of project which is later and transitional credit taken under section 140 of CGST Act' as value of T. Illustration 2: Sl. No Details of a REP (Res + Com) A B C D 1 No. of apartments in the project 100 units 2 No. of residential apartments in the project 75 units 3 Carpet area of the residential apartment 70 sqm 4 Total carpet area of the residential apartments C2 * C3 5250 sqm 5 value of each residential apartment 0.60 crore 6 Total value of the residential apartments C2 * C5 45.00 crore 7 No. of commercial apartments in the project ....
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....19 * C22 * C23 * C34 * C25 1.05 crore 36 Eligible ITC (Te)=Tc + Tr (after application of cap) C20 + C35 1.18 crore 37 ITC to be reversed / taken on transition, Tx= T- Te (after application of cap) C19 - C36 -0.18 crore 38 Tx after application of cap on % invoicing vis-a-vis Pc and payment realisation 39 % invoicing after application of cap(Pc + 25%) 45% 40 Total value of supply of residential apartments having t.o.s. prior to transition C33 10.80 crore 41 Consideration received 8.00 crore 42 Total value of supply of residential apartments having t.o.s. prior to transition after application of cap vis-a-vis consideration received 8 cr + 25% of 8 Cr 10.00 crore 43 F3 after application of both the caps C42 / C14 0.42 44 Tr= T x F1 x F2 x F3 x F4 (after application of both the caps) C19 * C22 * C23 * C43 * C25 0.97 45 Eligible ITC (Te)=Tc + Tr (after application of both the caps) C20 + C44 1.10 &nbs....
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.... "F1" shall be 1.) F2= Total carpet area of residential and commercial apartment booked on or before 31st March, 2019 ___________________________________________________________________ Total carpet area of the residential and commercial apartment in the RREP F3= Such value of supply of construction of residential and commercial apartments booked on or before 31st March, 2019 which has time of supply on or before 31st March, 2019 ____________________________________________________________ Total value of supply of construction of residential and commercial apartments booked on or before 31st March, 2019 (F3 is to account for percentage invoicing of booked residential apartments) F4= 1 _________________________________________ % Completion of construction as on 31st March, 2019 Illustration: where one- fifth (twenty percent) of the construction has been completed, F4 shall be 100 / 20 = 5. Explanation: "% Completion of construction as on 31st March, 2019" shall be the same as declared to the Real Estate Regulatory Authority in terms of section 4 and section 11 ....
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....ived and inputs in stock as on 31st March, 2019. 2. Where % completion as on 31st March, 2019 is zero but invoicing has been done having time of supply before 31st March, 2019, and no input services or inputs have been received as on 31st March, 2019, "Te" shall be calculated as follows: - (a) Input tax credit on inputs and input services attributable to construction of residential and commercial portion in an RREP, which has time of supply on or before 31st March, 2019 may be denoted as Te which shall be calculated as under, Te = Tn* F1 * F2 * F3 Where, - Tn= Tax paid on such inputs and input services on which ITC is available under the UTGST Act, received in 2019-20 for construction of residential and commercial apartments in the RREP. F1, F2 and F3 shall be the same as in para 1 above (b) The registered person shall be eligible to take ITC on goods and services received on or after 1st April, 2019 for construction of residential or commercial portion in the RREP, for which he shall not otherwise be eligible, to the extent of the amount of Te. (c) The amount 'Te' shall be computed separately for input tax credit of central tax, State tax, Union....
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.... Value of booked residential apartments C5 * C7 48 crore 10 Percentage invoicing of booked residential apartments on or before 31.03.2019 20% 11 Total value of supply of residential apartments having t.o.s. prior to transition C9 * C10 9.6 crore 12 ITC to be reversed on transition, Tx= T- Te 13 Eligible ITC (Te)=T x F1 x F2 x F3 x F4) 14 T (*see notes below) 1 crore 15 F1 1 16 F2 C8 / C4 0.8 17 F3 C11 / C9 0.2 18 F4 1/ C6 5 19 Eligible ITC (Te)=T x F1 x F2 x F3 x F4) C14 * C15 * C16 * C17 * C18 0.8 crore 20 ITC to be reversed on transition, Tx= T- Te C14 - C19 0.2 crore *Note:- 1. The value of T at C14 has been estimated for illustration based on weighted average tax on inputs. 2. In actual practice, the registered person shall take 'aggregate of ITC taken as declared in GSTR-3B of tax periods from 1.7.2017 or commencemnt of project which is later and trans....
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....C26 * C18 1.80 crore 28 ITC to be reversed / taken on transition, Tx= T- Te (after application of cap) C14 - C27 -0.80 crore 29 Tx after application of cap on % invoicing vis-a-vis Pc and payment realisation 30 % invoicing after application of cap(Pc + 25%) 45% 31 Total value of supply of residential apartments having t.o.s. prior to transition C25 21.60 crore 32 consideration received 16.00 crore 33 Total value of supply of residential apartments having t.o.s. prior to transition after application of cap vis-a-vis consideration received 16 cr + 25% of 16 Cr 20.00 crore 34 F3 after application of both the caps C33/C9 0.42 35 Te= T x F1 x F2 x F3 x F4 (after application of both the caps) C14 * C15 * C34 * C26 * C18 1.67 36 ITC to be reversed / taken on transition, Tx= T- Te (after application of both the caps) C14 - C35 -0.67 crore *Note:- 1. The value of T at C14 has been estimated for illustratio....
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.... 6 Paints 5 N 7 Architect/ designing/ CAD drawing etc. 10 Y 8 Aluminium windows, Ply, commercial wood 15 N In this example, the promoter has procured 80 per cent. of goods and services including cement from a GST registered person. However, he has procured paints, aluminum windows, ply and commercial wood etc. from an unregistered supplier. Hence at the end of financial year, the promoter is not required to pay GST on inputs on reverse charge basis. Illustration 3: A promoter has procured following goods and services [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], for construction of a residential real estate project during a financial year. Sl. No. Name of input goods and services Percentage of input goods and services received during the financial year Whether inputs procured from registered supplier? (Y/ N) 1 Sand 10 N 2 Cement 15 N 3 Steel 15 Y 4 Bricks 10 ....