TAXABILITY OF TDR ON OR AFTER 01.04.2019
TAXABILITY OF TDR ON OR AFTER 01.04.2019:
TAXABILITY OF TDR ON OR AFTER 01.04.2019.Vide Notification No- 04/2019- Central Tax dated 29.03.2019 amendment has been made to Notification No- 12/2017 dated 28.06.2017
1. Services by way of Transfer of Development Rights
2. Transfer on or after 01.04.2019
3. For Construction of RESIDENTIAL APARTMENTS by Promoter
4. Sale of Flats intended for Buyer
5. Except where entire consideration has been received before the issuance of completion certificate of first occupation whichever is earlier.
6. Amount of GST Exemption shall be GST Payable multiplied by carpet area of Residential Apartment divided by carpet area of residential and commercial apartment.
Tax Rate by Landowner- NIL
Taxability on Developer- Tax shall be payable on the un-booked flat on the date of Completion Certificate.
Tax Amount payable shall be GST payable multiplied by carpet area of residential project remaining un booked divided by total area of the residential apartment on the date of issuance of completion certificate.
Tax shall be payable @ 1% in case of affordable housing and 5% in case of residential apartment other than affordable housing.
Point of Payment of Tax: Taxability shall arise on the date of the completion certificate or first occupancy whichever is earlier.
COMMENTS: Above taxability applicable to residential apartment only and not the commercial apartments
TAXABILITY OF TDR ON OR AFTER 01.04.2019
POINT OF TAXATION ON DEVELOPMENT RIGHTS/ LONG TERM LEASE:
Notification No- 06/2019- Central Tax Rate dated 29.03.2019
CATEGORY OF PERSON
1. Promoter receives the Development Rights or FSI on or after 01.04.2019. Consideration payable by him is in form of
a. Construction services of residential or commercial apartments in projects
b. Or any other form including Cash
2. Promoter receives long term lease of Land on or after 01.04.2019 for the construction of residential project. Consideration payable by him is in form of
a. Upfront Amount called as Premium, Salami, Cost, Price, Development Charges or by any other name.
Nature of Consideration
1. Consideration in form Construction Service of Commercial or Residential Apartment in Project for supply of Development Rights of FSI
2. Monetary Consideration for supply of Development Rights of FSI
3. Upfront Payment for Long Term Lease of Land
4. Supply of Construction Service against consideration for supply of Development Rights of FSI
Point of Taxation-
Date of Issuance of Completion Certificate by Competent Authority or First Occupation, whichever is earlier.
AMENDMENT TO SECTION 9(3)- TAXATION UNDER REVERSE CHARGE:
Notification No- 05/2019- Central Tax (Rate) dated 29.03.2019 makes further amendment to Notification No- 13/2017- Central Tax Rate dated 28.06.2017
Nature of Supply
1. Supply of Development Rights or Floor Space Index for construction of a Project by Promoters
2. Upfront Amount called as Premium, Salami, Cost, Price, Development Charges or by any other name.
Supplier- Any Person
Recipient- Promoter
Analysis:
1. The above notification applicable to both Residential and Commercial Projects
2. The above notification applicable to both Ongoing Project as on 31.03.2019 and Project which
would commence on or after 01.04.2019.
3. Agreement executed on or before 31.03.2019 for transfer of Development Rights shall also be
subject to Reverse Charge in respect of the projects whose completion certificate will be issued on
or after 01.04.2019.
AMENDMENT TO SECTION 9(4)- TAXATION UNDER REVERSE CHARGE
Notification No- 7/2019- Central Tax Rated dated 29.03.2019- Notifying the class of persons liable to Reverse Charge u/s 9(4) of CGST Act, 2017 Promoter Registered Person has been notified as Category of Persons liable to pay tax under Reverse Charge pursuant to Section 9(4) of the CGST Act, 2017. Category of Supply liable to tax under Reverse Charge for procurement from Unregistered Person
1. Supply of goods and services or both [other than services by way of grant of development rights, long term lease of land or FSI]. Value of such supply shall be the shortfall of minimum value of goods or services or both required to purchased by promoter for the construction of the Project till the issuance of completion certificate.
2. Supply of Cement. Value of the Cement shall be the shortfall required to be purchased by the promoter for the construction of the project till the issuance of the completion certificate.
3. Capital Goods falling under any Chapter to the Schedule to the Custom Tariff Act, 1975.
Comment: Liability to pay tax under Reverse Charge shall be applicable only in case where developer selected the option to pay the tax without availment of Input Tax Credit. The developer who chose to pay the tax with availment of Input Tax Credit is not required to discharge the tax under reverse charge Supply of Development Rights are taxable under Reverse Charge u/s 9(3) as notified vide Notification No- 05/2019- Central Tax Rate dated 29.03.2019 irrespective of the fact whether the Landowner is registered or unregistered.
TAX RATE ON UNREGISTERED SUPPLIES TO DEVELOPERS
Vide Notification No- 8/2019 Central Tax Rate dated 29.03.2019 has amended the Notification No- 2/2017
Central Tax Rate dated 28.06.2017 Central Tax @ 9% and State Tax @ 9% has been prescribed by amendment to the Notification No- 1/2017 dated 28.06.2017
Nature of Supply- Supply of any goods other than cement and capital goods by an unregistered person to promoter for the construction of project.
Reverse Charge- Tax shall be payable by the Promoter as the recipient of the goods under Section 9(4) of CGST Act, 2017.
