The document discusses GST implications for works contracts and real estate transactions in India. Some key points:
- Works contracts are treated as supply of services under GST and taxed at 18%, with some works contracts taxed at 12%. Labour contracts are generally taxed at 18%.
- Builders must pay GST on sale of flats/villas if any amount is received prior to completion certificate. The rate is 18% with a 1/3 deduction for land value.
- Landlord share of construction is treated as supply of service by the builder and taxed at 18%. Valuation methods include open market value or cost.
- Landlords must also pay GST if amounts are received
This slide contains varied details about GST as applicable in Real Estate Sector in India. It further covers different aspects of GST for Joint Venture Projects.
Impact of GST on Real Estate Sector | PresentationTaxmann
Topics Covered in this Webinar:
1. Real Estate Sector in great difficulty
2. Issues under the Real Estate Sector
3. Constitutional Background
4. GST Council
5. Sale of the complex before completion
6. Transactions out of GSTneither goods nor service para 5 of
Schedule III of CGST Act
7. Real Estate Projects
8. Some General Observations
9. Separate accounts for each real estate project
10. Promoter
And, Many More Details.
Agenda:
GST on Work Contarcts
GST on Real Estate
Input Tax Credit Aspects relating to them
Miscellaneous Aspects relating to them
Read More at http://www.sbsandco.com/presentations/
OBJECTIVE
Under GST, the supplier of goods or services is liable to pay the tax to the Government. However, under the reverse charge mechanism (RCM), the liability to pay GST is cast on the recipient of the goods or services. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. In this webinar, we shall understand the applicability and provisions of RCM under GST.
Assessments Audit Penalties and Prosecution under GST LawAmit Mundhra FCA
This presentation covers the provisions related to assessments, audit, penalties, prosectuion and show cause notice provisions under GST laws updated upto 31-05-2017
The GST Council has relaxed filing rules for the first two months post implementation. Here's how to file your returns for these months using form GSTR 3B. To know more about GSTR 3B, visit our page https://cleartax.in/s/gstr-3b
GST Audit and GST Annual Return
presentation on GST Audit and Annual Return.
Covering handy material on Relevant provisions governing GST Audit , indicative checklists and summarized contents of annual return and Reconciliation statement
A quick reference for professionals
This slide contains varied details about GST as applicable in Real Estate Sector in India. It further covers different aspects of GST for Joint Venture Projects.
Impact of GST on Real Estate Sector | PresentationTaxmann
Topics Covered in this Webinar:
1. Real Estate Sector in great difficulty
2. Issues under the Real Estate Sector
3. Constitutional Background
4. GST Council
5. Sale of the complex before completion
6. Transactions out of GSTneither goods nor service para 5 of
Schedule III of CGST Act
7. Real Estate Projects
8. Some General Observations
9. Separate accounts for each real estate project
10. Promoter
And, Many More Details.
Agenda:
GST on Work Contarcts
GST on Real Estate
Input Tax Credit Aspects relating to them
Miscellaneous Aspects relating to them
Read More at http://www.sbsandco.com/presentations/
OBJECTIVE
Under GST, the supplier of goods or services is liable to pay the tax to the Government. However, under the reverse charge mechanism (RCM), the liability to pay GST is cast on the recipient of the goods or services. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply. In this webinar, we shall understand the applicability and provisions of RCM under GST.
Assessments Audit Penalties and Prosecution under GST LawAmit Mundhra FCA
This presentation covers the provisions related to assessments, audit, penalties, prosectuion and show cause notice provisions under GST laws updated upto 31-05-2017
The GST Council has relaxed filing rules for the first two months post implementation. Here's how to file your returns for these months using form GSTR 3B. To know more about GSTR 3B, visit our page https://cleartax.in/s/gstr-3b
GST Audit and GST Annual Return
presentation on GST Audit and Annual Return.
Covering handy material on Relevant provisions governing GST Audit , indicative checklists and summarized contents of annual return and Reconciliation statement
A quick reference for professionals
1. presentation on input tax credit under gstNarayan Lodha
GST, Goods And Service Tax, Basic Concept and Principals of Input Credit under GST, Availability of ITC in Special cases, ITC- Input Service Distributor, Electronic Cash Ledger, Electronic Credit Ledger, Refund of Tax under GST
#GST on Real Estate & Works Contract - A Complete Analysis# By SN PanigrahiSN Panigrahi, PMP
#GST on Real Estate & Works Contract - A Complete Analysis# By SN Panigrahi,
supply of service,
Sale of Land / Plots : Applicability of GST,
Value on which GST Applicable,
Sale of Undivided Portion of Land,
GST on Real Estate Before 1st Apr’2019,
GST on Real Estate After 1st Apr’2019,
Real Estate Notifications issued by CBIC effective from 1st April 2019,
New Scheme w.e.f 1st Apr’2019,
Residential Real Estate Project - RREP & Real Estate Project - REP,
Affordable Housing,
Ongoing Projects,
Reversal of Credit,
Payment on RCM,
Works Contract,
Government Contracts,
Liquidated Damages - LD,
OBJECTIVE
Goods and Services Tax (GST) is the Indirect Tax levied in India introduced in July 2017 which was one of the most important reforms in the Indian Economy. GST subsumed various indirect laws in the country and the led to the formation of a common national market. In this webinar, we shall examine and understand the various registrations under the GST Law.
this presentation consists of the information abou TDS ans TCS and their implications under GST. It also includes the differnce between both the terms.
Concept & Nature of supply under GST LawArpit Verma
Chapter III of Central Goods and Services Tax Act, 2017 & Integrated Goods and Services Tax Act, 2017 contains the provision of levy and collection of GST.
The expression “Supply” is defined under section 7(1) of Central Goods and Services Tax Act, 2017.
There is no such proposition in the existing laws as the concept of supply is unique to our tax system and considered as a ‘taxable event’ for the first time in indirect tax regime.
Read My Full Article on Concept & Nature of Supply Under GST.
Show Cause Notices, Adjudication & Introduction to Appeals under GSTGST Law India
This presentation gives a detailed information on show cause notices, reply to SCN, identification of deficiencies in SCN, the scope of writ, the procedure for adjudication under GST and lastly how to file appeal - drafting, its effect, and remedy.
OBJECTIVES:
Definition
Position under Service Tax and VAT
Position under GST
Composite supply
Taxability of Works contract
Provisions relating to Input tax credit
1. presentation on input tax credit under gstNarayan Lodha
GST, Goods And Service Tax, Basic Concept and Principals of Input Credit under GST, Availability of ITC in Special cases, ITC- Input Service Distributor, Electronic Cash Ledger, Electronic Credit Ledger, Refund of Tax under GST
#GST on Real Estate & Works Contract - A Complete Analysis# By SN PanigrahiSN Panigrahi, PMP
#GST on Real Estate & Works Contract - A Complete Analysis# By SN Panigrahi,
supply of service,
Sale of Land / Plots : Applicability of GST,
Value on which GST Applicable,
Sale of Undivided Portion of Land,
GST on Real Estate Before 1st Apr’2019,
GST on Real Estate After 1st Apr’2019,
Real Estate Notifications issued by CBIC effective from 1st April 2019,
New Scheme w.e.f 1st Apr’2019,
Residential Real Estate Project - RREP & Real Estate Project - REP,
Affordable Housing,
Ongoing Projects,
Reversal of Credit,
Payment on RCM,
Works Contract,
Government Contracts,
Liquidated Damages - LD,
OBJECTIVE
Goods and Services Tax (GST) is the Indirect Tax levied in India introduced in July 2017 which was one of the most important reforms in the Indian Economy. GST subsumed various indirect laws in the country and the led to the formation of a common national market. In this webinar, we shall examine and understand the various registrations under the GST Law.
this presentation consists of the information abou TDS ans TCS and their implications under GST. It also includes the differnce between both the terms.
Concept & Nature of supply under GST LawArpit Verma
Chapter III of Central Goods and Services Tax Act, 2017 & Integrated Goods and Services Tax Act, 2017 contains the provision of levy and collection of GST.
The expression “Supply” is defined under section 7(1) of Central Goods and Services Tax Act, 2017.
There is no such proposition in the existing laws as the concept of supply is unique to our tax system and considered as a ‘taxable event’ for the first time in indirect tax regime.
Read My Full Article on Concept & Nature of Supply Under GST.
Show Cause Notices, Adjudication & Introduction to Appeals under GSTGST Law India
This presentation gives a detailed information on show cause notices, reply to SCN, identification of deficiencies in SCN, the scope of writ, the procedure for adjudication under GST and lastly how to file appeal - drafting, its effect, and remedy.
OBJECTIVES:
Definition
Position under Service Tax and VAT
Position under GST
Composite supply
Taxability of Works contract
Provisions relating to Input tax credit
This is a presentation highlighting the intricacies involoved in work contract. A work contract is though a single contract for material and labour but invites the levy of service tax, sales tax, tds and above that reverse charge mechanism. Though a bit complicated yet intresting
Real estate transactions Under taxing lawGST Law India
The following presentation enumerates the taxing structure for real estate transactions and gst rates along with a comparison of the previous tax structure with the present structure under GST. it also discusses service tax on work contracts, service tax on renting, credit linked subsidy scheme, valuation of taxable supply, input tax credit, exemptions for builders, housing society.
Section 65(105)(zzzh) provides for a levy of service tax on services in relation to ‘construction of complex’ and an explanation was added by Finance Act, 2010.
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
1. GST on Real Estate and Works Contracts
CA Manindar K
Partner
M/s SBS and Company LLP
manindar@sbsandco.com
+91 9700734609
by
Guntur Branch of SIRC of ICAI
26th November, 2017
2. manindar@sbsandco.com www.sbsandco.com +91 97007346092
GST on Works Contracts
GST on Real Estate Transactions
Input Tax Credit Aspects relating to them
Miscellaneous Aspects relating to them
Agenda
3. 3
Understanding Supply
Works Contract under Pre GST Regime
Works Contract under GST Regime
GST Rate on Various Works Contract
GST on Works Contract
4. manindar@sbsandco.com www.sbsandco.com +91 97007346094
GST is levy on Supply of Goods or Services or both
‘Supply’ as defined under Section 7(1) of CGST Act, 2017
All forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made for consideration by a person in the course or furtherance of business
Import of services for a consideration whether or not in the course or furtherance of business
Activities specified in Schedule I, made or agreed to be made without consideration
Activities to be treated as supply of goods or supply of services as referred to in Schedule II.
Section 7(2) provides that activities specified in schedule III are neither supply of goods nor services
Understanding Supply
5. manindar@sbsandco.com www.sbsandco.com +91 97007346095
Scope and ambit of ‘Works Contract’ under Existing laws
Definition covers contracts towards movable as well as immovable property
Requires splitting of contract value between goods and services to levy VAT and Service Tax
Works Contracts under Pre GST Regime
Section 65B(54) of Finance Act, 1994 Section 2(45) of AP VAT Act, 2005
means a contract wherein transfer of property in goods involved
in the execution of such contract is leviable to tax as sale of
goods and such contract is for the purpose of carrying out
construction, erection, commissioning, installation, completion,
fitting out, repair, maintenance, renovation, alteration of any
movable or immovable property or for carrying out any other
similar activity or a part thereof in relation to such property
includes any agreement for carrying out for cash or for deferred
payment or for any other valuable consideration, the building
construction, manufacture, processing, fabrication, erection,
installation, laying, fitting out, improvement, modification, repair
or commissioning of any movable or immovable property
6. manindar@sbsandco.com www.sbsandco.com +91 97007346096
‘Composite Supply’ as defined u/s Section 2(30) CGST Act, 2017:
means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of
goods or services or both, or any combination thereof, which are naturally bundled and supplied in
conjunction with each other in the ordinary course of business, one of which is a principal Supply
‘Works Contract’ as defined u/s Section 2(119) of CGST Act, 2017:
“works contract” means a contract for building, construction, fabrication, completion, erection, installation,
fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of
any immovable property wherein transfer of property in goods (whether as goods or in some other form)
is involved in the execution of such contract
Works Contracts under GST Regime
7. manindar@sbsandco.com www.sbsandco.com +91 97007346097
Works Contracts are a species of composite supply
Works Contracts towards immovable property are alone considered as works contracts under GST
Para 6 of Schedule II of CGST Act, 2017 – works contracts as defined shall be treated as supply of services.
Works Contracts towards movable property are composite supplies and not works contracts under GST.
Such contracts are subject to GST either as goods or as services on the basis of principle supply.
Works Contracts under GST Regime
8. manindar@sbsandco.com www.sbsandco.com +91 97007346098
Rate of GST on various works Contract
Sl.No Nature of Contract Rate of GST
Works Contracts undertaken to CG, SG, UT, LA,GA or a Government Entity
1 Historical Monument, archeological site or remains of national importance 12
2 Canal, Dam or Other Irrigational Works 12
3 Pipeline, Conduit or Plant for water supply, water treatment or sewerage treatment or disposal 12
4 A civil structure or any other original work for use other than for commerce or industry 12
5 A structure meant pre-dominantly for use as educational, clinical, art or cultural establishment 12
6 A residential complex pre-dominantly for self use of Government or their employees or persons
specified in schedule III
12
7 Contracts predominantly involving earthwork (more than 75% of value) 5%
9. manindar@sbsandco.com www.sbsandco.com +91 97007346099
Rate of GST on various works Contract
Sl.No Nature of Contract Rate of GST
1 A road, bridge, tunnel or terminal for road transportation for use by general public 12
2 A civil structure or any other original works pertaining to BPL housing schemes viz. JNNURM,
Rajiv Awas Yojna, Pradhan Mantri Awas Yojna etc
12
3 A pollution control or effluent treatment plant except located as a part of a factory 12
4 A structure meant for funeral, burial or cremation of deceased 12
5 Railways excluding monorail or metro rail 12
6 A single residential unit otherwise than as part of a residential complex 12
7 Post harvest storage infrastructure for agricultural produce including a cold storage 12
8 mechanized food grain handling system, machinery or equipment for units processing
agricultural produce as food stuff excluding alcoholic beverages
12
9 All other works contract 18
10. manindar@sbsandco.com www.sbsandco.com +91 970073460910
All construction related labour contracts are subject to GST at 18%
Entry 11 and of Notification 12/2017-Central Tax (Rate) exempts the following labour contracts:
Services provided by way of pure labour contracts of construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original
works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All
(Urban) Mission/Pradhan Mantri Awas Yojana.
Services by way of pure labour contracts of construction, erection, commissioning, or installation of original
works pertaining to a single residential unit otherwise than as a part of a residential complex
Rate of GST on Labour Contracts
11. manindar@sbsandco.com www.sbsandco.com +91 970073460911
Works contracts in general are subject to GST at 18%
Specified works contracts are subject to GST at 12%
Govt related works contracts provided by main contractor are taxable at 12% while sub-contractors are taxable at 18%
Govt related works contracts having more than 75% of earth work are taxable at 5%
All construction related labour contracts are subject to GST at 18%
Labour contracts relating to BPL housing schemes are exempt while the related works contracts are taxable at 12%
Labour contracts relating to single residential unit are exempt while the related works contracts are taxable at 12%
Summarizing GST Rates on Works Contracts
12. 12
GST Implications on Builder for Sale of flats/villas
GST Implications on Builder for construction towards landlord Share of built-up area
GST Implications on Landlord upon Sale of his share of built-up area
GST Implications on Sale of Plots
GST on Real Estate
13. manindar@sbsandco.com www.sbsandco.com +91 970073460913
Law relating to levy of VAT and ST on Builders Activity was settled after a decade of litigation
Taxability under respective taxes was questioned for following reasons;
Builder acquires land and starts constructing the residential complex
A prospective customer pays advances to buy the flats after construction is completed.
Builder enters into agreement to sell with prospective customers before collection of advances
Such agreements per se does not create SP and SR relation to levy service tax
Such agreements to buy constructed immovable property may not amount to works contracts to levy
VAT on material used by builder for construction
GST Implications on Builder for Sale of Flats/Villas
14. manindar@sbsandco.com www.sbsandco.com +91 970073460914
Levy sustained in ST Law in the following manner;
Introduced a legal fiction w.e.f 01.07.2010 to deem that service is involved if builder receives
any amount prior to completion certificate.
Similar fiction retained in Negative List regime also.
Deeming fiction is upheld by Courts
GST Implications on Builder for Sale of Flats/Villas
15. manindar@sbsandco.com www.sbsandco.com +91 970073460915
Levy sustained in VAT law after L&T Ltd vs State of Karnataka, 2014(34)STR481(SC)
Taxing the sale of goods element in a works contract under Article 366(29A)(b) read with Entry 54 List II is permissible even
after incorporation of goods provided tax is directed to the value of goods and does not purport to tax the transfer of
immovable property. The value of the goods which can constitute the measure for the levy of the tax has to be the value of the
goods at the time of incorporation of the goods in works even though property passes as between the developer and the flat
purchaser after incorporation of goods. (Para 101)
It may, however, be clarified that activity of construction undertaken by the developer would be works contract only from the
stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the
agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government (Para 115)
GST Implications on Builder for Sale of Flats/Villas
16. manindar@sbsandco.com www.sbsandco.com +91 970073460916
Levy— Key Distinction between Service Tax and Value Added Tax
GST Implications on Builder for Sale of Flats/Villas
Service Tax Value Added Tax
Levy is applicable on entire service portion irrespective
of the stage of completion at time of booking a flat by
Customer
Levy is applicable only on value of material
incorporated in the flat after booking of a flat by
customer
17. manindar@sbsandco.com www.sbsandco.com +91 970073460917
Para 5(b) of Schedule II treats Builder’s Activity as Supply of Service:
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
Para 5 of Schedule III excludes transactions in immovable property from the scope of ‘Supply’
Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building
Rate of GST is 18% with 1/3rd deduction towards land value
GST Implications on Builder for Sale of Flats/Villas
18. manindar@sbsandco.com www.sbsandco.com +91 970073460918
It is a works contract involving non-monetary consideration for construction
Circular 151/2/2012-ST dated 10.02.2012— clarified that ST is applicable
Rate of GST is 18% on the value of land received towards builder’s share
Valuation under Service Tax— Two School of Thoughts
GST on Landlord Share of Construction
Aspect Circular 151/2/2012-ST Industry Perspective
Consideration Development Rights Development Rights
Valuation Value of development rights is not ascertainable…
Value shall be determined on the basis of price at
which first sale deed is executed
Value of development rights is
ascertainable.. Nothing but the stamp duty
value of land
Point of Taxation At the time of handing over the built-up area At the time when JDA is entered, area to be
built-up is divided between builder and
landlord
19. manindar@sbsandco.com www.sbsandco.com +91 970073460919
When consideration is non-monetary— Rule 27 of CGST Rules, 2017 provides that value shall be
determined in the following sequentially manner;
Open Market Value— it means the money payable by an unrelated person in a transaction where price is sole
consideration to obtain such supply at the time when supply being valued is made
Money equivalent value of non-monetary consideration— value of non-monetary consideration
Value of supply of like kind and quality— Value of those supplies made under similar circumstances and having
like characteristics and quality as that of present supply
110% of the cost of supply
GST on Landlord Share of Construction
20. manindar@sbsandco.com www.sbsandco.com +91 970073460920
Possible Valuation Methods under GST:
Time of supply— Ambiguity as existing under Service Tax continues
GST on Landlord Share of Construction
Method Comments
Open
Market
Value
1. Similar to first sale deed method prescribed under 151 Circular
2. Value of built-up area towards land lord share shall be determined using the rate at which first sale
deed is executed
3. 18% rate shall be adopted after deducting 1/3rd value towards landlord share
4. Applicability may be questioned on the ground that supply being made is not at the same point of time
Money
equivalent
Value
1. Value of land can be considered
2. 18% rate shall be adopted on value proportionate to builder to arrive at GST
3. Value adopted by this method may be rejected by department
Cost Method 1. Value being 110% of the construction cost
2. 18% rate shall be adopted on value proportionate to builder to arrive at GST
3. Cannot be adopted if time of supply is said to arise at the time of JDA
4. Used to substantiate the adequateness of the land value if any adopted
21. manindar@sbsandco.com www.sbsandco.com +91 970073460921
Para 5(b) of Schedule II is not only applicable to builder but also to landlord.
If any money is received from customers prior to completion, the said para is applicable.
Thus, Landlord is also required to pay GST upon sale of flats/villas to customers
GST paid to builder can be claimed as ITC for paying the GST collected from customers
GST on Landlord for Sale of Built-up Area
22. manindar@sbsandco.com www.sbsandco.com +91 970073460922
Para 5 of Schedule III provides that sale of land is neither a supply of goods nor services.
Therefore, no GST is applicable in general on plot sales.
If the sale consideration is split between land value and development cost— GST may get attracted on
development
As this is exempt activity, ITC is required to be reversed…
Advisable to opt for separate vertical registration if this turnover significantly wipes out the common ITC
GST Implications on Plot Sales
23. 23
Input Tax Credit Aspects Relating to Works
contract and Real Estate Transactions
24. manindar@sbsandco.com www.sbsandco.com +91 970073460924
Seamless credit is the benefit of GST
All goods or services used or intended to be used in the course or furtherance of business are eligible for ITC
Conditions for availment of ITC
Possession of tax invoice or debit note issued by a supplier registered under this Act.
Has received the goods or services or both
Subject to section 41, the tax charged by the corresponding supplier would have been paid
Has furnished the return under section 39
Input Tax Credit
25. manindar@sbsandco.com www.sbsandco.com +91 970073460925
ITC claimed on goods or services shall be restricted in the following manner;
Used partly for business and partly for non-business purpose
Used partly for effecting taxable supplies including zero-rated supplies and partly for exempt supplies
Sale of flats/villas after OC— ITC should be restricted proportionately
In case the builder is also engaged in sale of plots— ITC should be restricted proportionately
Input Tax Credit
26. manindar@sbsandco.com www.sbsandco.com +91 970073460926
ITC on motor vehicles and other conveyances except—
When used for transportation of goods
When used for further supply of such vehicles or conveyances
When used for transport of passengers or imparting driving, flying, navigating such vehicles or conveyances
Works contract services when supplied for construction of an immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service
Goods or services or both received by a taxable person on his own account for construction of
immovable property other than plant and machinery
Goods lost, stolen, destroyed, written off or disposed by way of gift or free samples
Blocked Credits
27. manindar@sbsandco.com www.sbsandco.com +91 970073460927
Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery
except when used to supply same category of outward supply
Membership of health, club and fitness center
Rent-a-cab, life and health insurance services except
when used to supply same category of outward supply where Government notifies the services which are
obligatory for employer to provide its employees under any law
Where the services are used to supply same category of outward supply
Travel benefits extended to employees on vacation such as leave or home travel concession
Blocked Credits
28. manindar@sbsandco.com www.sbsandco.com +91 970073460928
Fly ash bricks rate reduced from 12% to 5%
Following goods rate got reduced from 28% to 18%
Wires, cables, electrical plugs, switches, sockets, Fans, lamps, lighting etc
Particle/fibre boards and ply wood. Article of wood, wooden frame, paving block
Sanitary ware and parts thereof of all kind
Floor covering, baths, shower, sinks, washbasins, seats, sanitary ware of plastic
Slabs of marbles, granite, ceramic tiles
Doors, windows and aluminum frames
Bull dozers, excavators, road rollers, land levelling machinery
Cement, paints, varnishes, wall putty are taxed at 28%
Rates of Inputs used in Construction w.e.f. 15.11.2017
29. manindar@sbsandco.com www.sbsandco.com +91 970073460929
Overflow of ITC arises due to inverted duty structure
Such excess credit can be claimed as refund under section 54 of CGST Act, 2017
Section 54 empowers Government to notify supplies for which refund is not available due to inverted
duty structure
Builder services are notified— No refund is available on account of excess input
Contractors undertaking Infra works can claim refund
Overflow of ITC
30. 30
Construction of Row Houses
GST Implications on Splitting the Agreement to Sell
Free supply material
Value includes other duties/taxes
Miscellaneous Aspects
31. manindar@sbsandco.com www.sbsandco.com +91 970073460931
Contractor constructing a single residential unit is liable to pay GST at 12% (Works Contract)
Pure labour contracts in this regard are exempt from GST
Builder constructing villas with common areas and facilities— cannot be considered as single residential
units {CCE vs Gandharva Infrastructure and Projects Ltd, 2017-TIOL-3180-CESTAT-DEL}
Row houses without common areas and facilities constructed by taking separate approvals for each
house can be considered as single residential unit.
Whether builder is required to pay GST on Row houses?
Construction of Row Houses
32. manindar@sbsandco.com www.sbsandco.com +91 970073460932
Para 5(b) of Schedule II treats Builder’s Activity as Supply of Service:
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
Deeming fiction in para 5(b) is applicable only to a complex or building
Para 5 of Schedule III excludes transactions in immovable property from the scope of ‘Supply’
‘Building’ means ‘a structure with a roof and walls, such as a house or factory’ (Oxford Dictionary)
If the word building is given wide meaning, then deem fiction is also applicable to row house (single unit)
As the word ‘building’ is preceded by ‘complex’— will its meaning is restricted to multistoried structure
If it so, deeming fiction is not applicable to single residential unit and will be excluded from ‘Supply’
Construction of Row Houses
33. manindar@sbsandco.com www.sbsandco.com +91 970073460933
Under Service Tax, the tax on service portion was assessed on presumptive basis (30%/40%)
The Valuation provisions of ST law requires inclusion of free supply material.
Under GST, the entire contract is treated as supply of service— there is no scope for presumptive
taxation
Therefore, there is no need to include material freely supplied by Principle
Free-Supply Material
34. manindar@sbsandco.com www.sbsandco.com +91 970073460934
Common practice of builders to split the ‘Agreement to Sell’ into ‘Sale Deed’ and ‘Completion Contract’
Under ST law, effective ST rate on sale deed value is 4.5% while on completion contract is 10.5%
Under GST regime, completion contract may be treated as works contract liable to tax at 18%
Splitting of Agreement to Sell
Particulars Single Instrument Splitting
Sale Deed Completion
Value 50 30 20
GST 6 3.6 3.6
35. manindar@sbsandco.com www.sbsandco.com +91 970073460935
Section 15(2)(a) of CGST Act, 2017 provides that the value of supply includes
any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this
Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods
and Services Tax (Compensation to States) Act, if charged separately by the supplier
Labour cess on works contracts are required to be included in contract value to quantify GST
Section 15(2)(d) of CGST Act, 2017 provides for inclusion of interest or late fee or penalty for delayed
payment of any consideration for any supply
Value includes other duties/taxes
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CA Manindar K
Partner
M/s SBS and Company LLP
manindar@sbsandco.com
9700734609
Guntur Branch of SIRC of
ICAI
26th November, 2017
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