ANALYSIS OF THE NOTIFICATION ISSUED BY CBIC ON 29.03.2019

ANALYSIS OF THE NOTIFICATION ISSUED BY CBIC ON 29.03.2019:

DEFINITION AS PER RERA:

CARPET AREA- “carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
“COMPLETION CERTIFICATE” means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws;

“REAL ESTATE PROJECT” means the development of a building or a building consisting of
apartments, or converting an existing building or a part thereof into apartments, or the development of
land into plots or apartment, as the case may be, for the purpose of selling all or some of the said
apartments or plots or building, as the case may be, and includes the common areas, the development
works, all improvements and structures thereon, and all easement, rights and appurtenances belonging
thereto;

TAXABILITY ON SUPPLY OF CONSTRUCTION SERVICES- WITHOUT INPUT TAX CREDIT

Notification No- 03/2019 dated 29.03.2019 Construction of
a. Affordable Residential Apartment in a Residential Real Estate Project taxable @ 1.50%. “AFFORDABLE RESIDENTIAL APARTMENT” residential apartment in a project 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. Gross amount charged by promoter shall include preferential location charges, development charges, parking charges, common facility charges.

RESIDENTIAL REAL ESTATE PROJECT- 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.

Residential Apartments other than Affordable Residential Apartment in Residential Real Estate Projects taxable @ 7.50%.
Residential Apartment means apartment intended for residential use.
c. Commercial Apartment in Residential Real Estate Project taxable @ 7.50%. Commercial Apartment means apartment other than Residential Apartments.

Comments: If the commercial apartment is not constructed in Residential Real Estate Project, then concessional tax rate shall not be applicable. Hence the project in which commercial apartments carpet area is more than 15% of the total carpet area, the reduced rates shall not be applicable
d. Affordable Residential Apartment in Real Estate Project taxable @ 1.50%
e. Residential Apartment other than Affordable Residential Apartments in Real Estate Project taxable @ 7.50%
i) By a promoter
ii) Commences on or after 01.04.2019 or in an Ongoing Project
iii) Promoter has not exercised to pay the tax at the rates (ie) and (if) [OPTION TO PAY THE TAX WITH AVAILMENT OF INPUT TAX CREDIT]
iv) Except where entire consideration has been received before the issue of completion certificate or first occupancy whichever is higher.
v) Deduction of towards Land Value being one-third value allowed.

CONDITIONS TO BE COMPLIED FOR OPTING TO PAY TAX @ 1% OR 5% AS APPLICABLE-

i) The above tax shall be paid in cash by debiting the Electronic Cash Ledger

ii) No Input Tax Credit has been Taken. ITC has been availed to the extent prescribed in Annexure- I (Real Estate Project) and Annexure- II (Residential Real Estate Project)
iii) Payment of Tax shall be made debiting Electronic Cash Ledger/ Credit Ledger computed as per Annexure- I (Real Estate Project) and Annexure- II (Residential Real Estate Project) equivalent to ITC attributable to construction of Project.
iv) Developer shall pay the tax on the supply of construction of Apartment to the Landowner where in the consideration is in form of construction of Apartments
v) Landowner shall be eligible to claim the above ITC provided he supplies such apartment before the issuance of Completion Certificate.
vi) 80% of value of Input/ Input Services shall be received from the Registered Suppliers other than-

a. Services by way of grant of Development Rights
b. Long Term Lease of Land -Upfront Payment in form of Salami, Development Charges
c. FSI

vii) Tax on Input and Inputs Services discharged under Reverse Charge shall be treated as purchased from Registered Persons
viii)In case the procurement from Registered Suppliers fall short of 80%, tax shall be paid by promoter on the value of 18% on reverse charge basis. Further where cement is procured from Unregistered Persons, tax under reverse charge shall be paid at the applicable rates under reverse charge
ix) Shortfall of tax being 80% to be procured from the Registered Suppliers shall be paid by the end of the Financial Year but not later than the month of June following the end of the Financial Year.
x) Tax under reverse charge on Cement procured from the Unregistered supplier shall be paid in the month in which the same is procured.
xi) The Promoter shall maintain Project Wise account of Inward Supplier from Registered and Unregistered Supplier
xii) In respect of the ITC not availed, the same is required to be reported in GSTR 3B in “Ïneligible Credit”