Note on GST for Builders and Developers

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Statutory provisions in respect to the construction of complex

 Following is ‘supply of service’ as per para 5(b) of Schedule II of CGST Act.

‘Construction of a complex, building, civil structure or a part thereof, including a complex or building 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 purposes of this clause-

(1) the expression “competent authority” means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely –

(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or

(ii) a chartered engineer registered with the Institution of Engineers (India); or

(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority.

(2) the expression “construction” includes additions, alterations, replacements or remodeling of any existing civil structure.

Residential Complex –

“Residential complex” means any complex comprising of a building or buildings, having more than one single residential unit – para 2 of Notification No. 12/2017-C.T. (Rate) and No. 9/2017-I.T. (Rate) both dated 28-6-2017, effective from 1-7-2017.

Single Residential Unit –

“Single residential unit” means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family – para 2 of Notification No. 12/2017-C.T. (Rate) and No. 9/2017-I.T. (Rate) both dated 28-6-2017, effective from 1-7-2017.

Definitions of terms used

Various terms are used in the new scheme of GST on real estate. These are explained below.

AFFORDABLE RESIDENTIAL APARTMENT

As per para 4 clause (xvi) to Notification No. 11/2017-C.T. (Rate) and 8/2017- I.T. (Rate) both dated 28-6-2017 inserted w.e.f. 1-4-2019, the term “affordable residential apartment” shall mean, –

(a) a residential apartment in a project which commences on or after 1- 4-2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty-five lakhs rupees. For the purpose of this clause, –

(i) Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the whole of MMR) with their respective geographical limits prescribed by an order issued by the Central or State Government in this regard.

(ii) Gross amount shall be the sum total of: –

 (A) Consideration charged for the services specified at item (i) and (ic) in column (3) against sl. No. 3 in the Table [can not understand what is meant as there are no such items against Sr. No. 3]

(B) Amount charged for the transfer of land or undivided share of land, as the case may be including by way of lease or sublease; and

(C) Any other amount charged by the promoter from 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-I.T. em (b), sub-I.T. em (c), sub-I.T. em (d), sub-I.T. em (da) and sub-I.T. em (db) of item (iv); sub-I.T. em (b), sub-I.T. em (c), sub-I.T. em (d) and sub-I.T. em (da) of item (v); and sub-I.T. em (c) of item (vi), against serial number 3 of the Table above, in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be.

APARTMENT BOOKED ON OR BEFORE 31-3-2019

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 the supply of construction of which has a time of supply on or before the 31st March 2019 and

(b) at least one installment 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

– clause (xii) of paragraph 4 of Notification No. 11/2017-C.T. (Rate) and 8/2017-I.T. (Rate) both dated 28-6-2017 inserted w.e.f. 1-4-2019.

APARTMENT

“Apartment” shall have the same meaning as assigned to it in section 2(e) of the Real Estate (Regulation and Development) Act, 2016 [RERA]

– clause (xiv) of paragraph 4 of Notification No. 11/2017-C.T. (Rate) and 8/2017-I.T. (Rate) both dated 28-6-2017 inserted w.e.f. 1-4-2019.

As per section 2(e) of the Real Estate (Regulation and Development) Act, 2016 [RERA], “Apartment” whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified.

PROJECT

The term “project” shall mean a Real Estate Project or a Residential Real Estate Project [RERA]

– clause (xv) of paragraph 4 of Notification No. 11/2017-C.T. (Rate) and 8/2017-I.T. (Rate) both dated 28-6-2017 inserted w.e.f. 1-4-2019.

PROMOTER

 “Promoter” shall have the same meaning as assigned to it in section 2(zk) of the Real Estate (Regulation and Development) Act, 2016 [RERA]

– clause (xvii) of paragraph 4 of Notification No. 11/2017-C.T. (Rate) and 8/2017-I.T. (Rate) both dated 28-6-2017 inserted w.e.f. 1-4-2019.

RERA defines ‘promoter’ as follows – “Promoter” means,—

• a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or
• a person who develops the land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon;
• any development authority or any other public body in respect of allottees of— (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, or the purpose of selling all or some of the apartments or plots; or
• an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or
• any other person who acts himself as a builder, colonizer, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
• such other person who constructs any building or apartment for sale to the general public. Explanation.—For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder – section 2(zk) of the Real Estate (Regulation and Development) Act, 2016 [RERA].

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