TaxTMI 
TaxTMI 
Seeks to amend notification published as per S.R.O. No. 370/2017 so as to notify CGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.
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....aragraph, (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 "sub-section (5) of section 15" shall be substituted by the symbol ","; (c) 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 Estate Project (hereinafter referred to as 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 state 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 receive....
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....nd 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 project, whichever is earlier) falls short of the said threshold of 80 per cent, tax shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of eighteen per cent on reverse charge basis and all the provisions of the Kerala State Goods and Services Tax Act, 2017 (20 of 2017) shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or servic....
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....ified 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 option to pay state 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 th....
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.... residential apartments, in respect of which the promoter has exercised option to pay state 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 (i), (ia), (ib), (ic), (id) and (ie) in column (3) shall attract state tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 9 (b) against serial number 3,- a. item (ii) and the entries relating thereto in columns (3), (4) and (5) shall be omitted; b. in item (iv) in column (3),- (1) after the fi....
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....e 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 other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above. Explanation.-For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id), (ie) and (if) in column (3) shall attract state tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry."; (c) against serial number 16, in item (ii) in column (3), for the w....
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....e 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, 2019 and (b) at least one instalment has been credited to the bank account of the registered person on or before the 31st March, 2019 and (c) an allotment letter or sale agreement or any other similar document evidencing booking of the apartment has been issued on or before the 31st March, 2019; (xiv) the term "apartment" shall have the same meaning as assigned to it in clause (e) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (Central Act 16 of....
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....the buyer of the apartment including preferential location charges, development charges, parking charges, common facility charges etc.; (b) an apartment being constructed in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table above, in respect of which the promoter has not exercised option to pay state tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be." (xvii) the term "promoter" shall have the same meaning as assigned to it in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (Central Act 16 of 2016); (xviii) the term "Real Estate Project (REP)" shall have the same meaning as assigned to it in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (Central Act 16 of 2016); (xix) the term "Residential Real Estate Project (RREP)" shall mean a REP in which the carpet area of the commer....
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.... work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws; (xxiv) internal development works means roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, provision for community buildings and for treatment and disposal of sewage and sullage water, solid waste management and disposal, water conservation, energy management, fire protection and fire safety requirements, 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 clause (k) of section 2 ....
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....butable to (a) construction of commercial portion and (b) construction 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 Total carpet area of residential apartment booked on or before 31st March, 2019 F2= Total carpet area of the residential apartment in REP Such Value of supply of construction of residential apartments booked on or before 31st March, 2019 which has time of supply on or before 31st March, 2019. F3= Total value of supply of ....
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....n form GST ITC-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 availed on goods and services received for the project on or prior to 31st March, 2019, input tax credit attributable to construction of residential po....
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....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 per cent 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 per cent 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 per cent 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 based on actual per unit consumption of inputs and input services based on the documents duly c....
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.... 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 period from 1-7-2017 or commencement 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 25 units 8 Carpet area of the Commercial apartment 30 sqm 9 Total carpet area of ....
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....C36 -0.18 crore 38 Tax 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 8Cr + 25% of 8 Cr 10.00 crore 43 F3 after application of both the caps C42/C14 0.42 44 Tr=TXF1XF2XF3XF4 (after application of both the caps) C19*C22*C23 *C24*C25 0.97 45 Eligible ITC (Te)=Tc +Tr (after application of both the caps) cC0+C44 1.10 46 ITC to be reversed/taken on transition, Tx=T-Te (after application of both the caps) C19-C45 -0.1 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....
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....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 per cent) 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 of Real Estate (Regulation and Development) Act, 2016 (Central Act 16 of 2016) and where the same is not required to be declared to the Real Estate Regulatory Authority, it shall be got determined and certified by an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (Central Act 20 of 1972) or a chartered engineer registered with the Institution of Engineers (India). (c) The amounts 'Tx' and 'Te' shall be computed separately for input tax credit of Central Tax, State tax, Union Territory Tax and Integrated Tax. (d) Where, Tx is positive, i.e., Te < T, the ....
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.... Where,- Tn= Tax paid on such inputs and input services on which ITC is available under the CGST 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 Territory Tax and Integrated Tax. 3. Notwithstanding anything contained in paragraph 1 or paragraph 2 above, Te shall be determined in the following 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 per cent points; (ii) where the value of invoices ....
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.... 16 F2 C8/C4 0.8 17 F3 C11/C9 0.200 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 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 period from 1-7-2017 or commencement 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 Residential Real Estate Project (RREP) A B C D 1 No. of apartments in the project 100 units 2 No. of residential apartments in the project 100 units 3 Carpet area of the residential apartment 70 sqm 4 Total carpet area of the residential apartments C2*C3 7000 sqm 5 Value of each residential apartment 0.60 crore 6 Percentage completion as on 31-....
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....ived 16 Cr + 25% of 16 Cr 20.00 crore 34 F3 after application of both the caps C33/C9 0.42 35 Te=TXF1XF2XF3XF4 (after application of both the caps) C14*C15* C16*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 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 period from 1-7-2017 or commencement of project which is later and transitional credit taken under section 140 of CGST Act' as value of T. ANNEXURE III Illustration 1: A promoter has procured following goods and services [other than capital goods and services by way of grant of development rights, long term lease of land or FSI] 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 received from r....
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....l, 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 Y 5 Flooring tiles 10 Y 6 Paints 5 Y 7 Architect/designing/ CAD drawing etc. 10 Y 8 Aluminium windows 15 N 9 Ply, Commercial wood 10 N In this example, the promoter has procured 50 per cent of goods and services from a GST registered person. However, he has procured sand, cement and aluminium windows, ply and commercial wood etc. from an unregistered supplier. Thus, value of goods and services procured from registered suppliers during a financial year falls short of threshold limit of 80 per cent. To fulfill his tax liability on the shortfall of 30 per cent from mandatory purchase, the promoter has to pay GST on cement at the applicable rate on reverse charge basis. After payment of GST on cement, on the remaining shortfall of 15 per ....