Tax Query
As per schedule 2 of the CGST ACT, renting out of immovable property shall be treated as a supply of services
Renting out a residential property for residential purpose is exempt from GST. Any other type of lease of renting out of immovable property shall attract 18% GST. However, registration under GST is not required to be obtained if total value of services does not exceed Rs. 20 Lakh (10 lakh for special states).
Since your total rental income is Rs.15,00,000, you neither need to get registered nor need to pay any GST.
Ready to move in properties shall not attract GST.The construction of a complex building, civil structure, or a part thereof, intended for sale to a buyer, wholly or partly, is subject to 12 per cent tax with full input tax credit. Sale or resale of ready to move property does not attract GST.
I assume that you are the ultimate customer who is not registered under GST. You are not eligible to get any benefit of GST.
The construction of a complex building, civil structure, or a part thereof, intended for sale to a buyer, wholly or partly, is subject to 12 per cent tax with full input tax credit. GST rate on affordable housing projects is 8%
GST rate on affordable housing projects is 8%. However, the government on February 7, 2018, asked builders not to charge any GST from home buyers, as the effective GST rate (i.e. 8%) can be adjusted against the input credit. The builders can levy GST on buyers of affordable housing projects, only if they reduce the apartment prices.
Selling or buying of property does not attract GST. Neither you nor the seller is required to pay any GST since you are buying a ready to move property.
From June 1st 2013, when a buyer buys immovable property (i.e. a building or part of a building or any land other than agricultural land) costing more than Rs 50lakhs, he has to deduct 1% TDS when he pays to the seller.
When we take loan, bank charges processing fees, valuation charges and other charges upfront. Though interest on loan is out of purview of GST, on all other amounts GST is payable. Currently, it is taxed at 18%. GST is not applicable to prepayment fee for an MCLR-linked mortgage, but prepayment fee for a fixed rate mortgage is taxed 18%. The borrower is taxed at 18% on any charges recouped by lenders.
Just saving and investing in the real estate is not enough. One needs to have a systematic plan in place to be able to make the most out of their investments. Investing in the right instruments is equally important.Investing our hard-earned money is a savvy method to save for large and small expenses. A basket of different instruments is called a portfolio. Have a portfolio that is balanced. Make your own balanced portfolio having various instruments after considering your future goals and risk appetite.
Ready to move property does not attract GST. However, if you are planning to purchase under construction property, the builder may charge 12% GST to you.
Brokerage is a service and will cover under the provision of GST. There is 18% GST rate on brokerage on transaction value. However, you are liable to pay GST if the total valueof supply exceeds Rs.20 lakh.
GST is payable on transaction value. Since there is no transaction, GST is not payable. Further, GST is payable only when the tax payer is registered. Registration is compulsorily required when value of supply exceeds threshold limit.
In this case, builder will charge GST since it will be considered that he is providing construction services which is taxed at 12%. Paying loan EMI has no relation with GST.
There are two types of taxation involved. Direct Tax and Indirect Tax. From the point of view of direct Tax, you need to ensure that proper bills of expenses are duly kept which shall be necessary to compute your income. You need to get PAN for your business as association of persons.
From indirect tax point of view, if the aggregate value of total supply exceeds the threshold limit, you need to get registered as AOP and need to pay GST on transaction value.
There is a four-tier tax structure – 5, 12, 18 and 28 %. With 28% slab, a cessis also imposed on certain luxury and demerit goods. some other rates are also prevailing, for e.g. 3% on jewellery, 0.25% on diamond.
• For the payment of taxes under reverse charge, ITC cannot be claimed. Thus, reverse charge liability is required to be deposited through electronic cash ledger only. Further, the amount of taxes paid under reverse charge can be utilized to pay the output tax liability of the next month under normal charge.
The Input credit of the amount paid under RCM for transportation service received from GTA can be taken. 2) Manpower supply and security service are not under Reverse Charge but payable by service provider.
Form CMP-01 is for opting Composition scheme. Composition scheme can be opted only if the turnover is below 75 lakhs and the supplier is making only intra-state supply. In case of inter-state supply and supply through e-commerce operator composition scheme is not available. If you are registered in Gujarat and supplying only in Gujarat, then you can opt for composition scheme.
ISD is required to obtain compulsory registration under GST in a state or Union territory from where he makes a taxable supply of goods or services or both. Thus, he is not required to obtain registration in the State/Union territory to where he is distributing the credit.
Only supplies made to SEZ has been notified as Zero-rated supply. Supplies to EOU has not been notified under Zero rated supply so it shall be treated as normal taxable supplies.
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.
Further, mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
For e.g. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.
The aggregate turnover of A shall be taken as Rs. 2,10,000 because aggregate turnover includes all supplies made by the person, whether on his own account or made on behalf of his agent. Thus, the turnover of agent will be included in the turnover of principal.
In case of export, tax paid on the input service can be claimed as refund under GST.
If a person only deals in exempted product having their own brand then does it require registration. If a person only deals in exempted supplies and no taxable supplies then no registration is required to be obtained.
If reverse charge is applicable on a particular supply then the composition dealer has to pay GST under reverse charge as a recipient of supply at normal GST rates as applicable.
Under GST, registration is compulsory for persons who make taxable supplies on behalf of other persons as an agent. Thus, you are compulsorily required to obtain registration under GST irrespective of your turnover. It means that if an agent is making a taxable supply on the behalf of his principal, then he is compulsorily required to obtain registration under GST even if his turnover is less than Rs. 20 lakhs. Thus, if you work as an agent, then registration under GST is mandatorily required.
Under GST regime, even if the reimbursement of charges up to Rs. 7500 are exempt under GST, but still the exempted supplies will be covered for calculating the aggregate turnover. Thus, registration under GST will be required if aggregate of taxable & exempted supplies is more than Rs 20 lakh and the reimbursement up to Rs. 7500 shall be exempt under GST. Further, if the charges are collected in the capacity of pure agent, then no GST shall be leviable, otherwise, GST shall be payable in this case.
Exports are classified as zero-rated supplies under GS. These are not exempted services therefore tax invoice is required to be issued in case of export of services.
In case of transfer of business, input tax credit which remains unutilized in the electronic credit ledger of the transferor shall be transferred in the electronic credit ledger of the transferee. Transfer of assets shall be treated as supply and GST shall be levied on it.
The services provided by a commission agent for sale or purchase of agricultural produce are exempt under GST therefore no registration is required to be obtained.
The excess tax can be claimed as refund by filing your income tax return (ITR). After your return is processed and provided the tax department accepts your refund claim, the amount claimed as refund would l be credited back to your bank account through Electronic Clearance Service (ECS) transfer. You would also get an email intimation for the same.
Ans: Rental income in the hands of owner is charged to tax under the head “Income from house property”. Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged to tax under the head “Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.
To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”.
Ans: Composite rent includes rent of building and rent towards other assets or facilities. The tax treatment of composite rent is as follows:-
(a) In a case where letting out of building and letting out of other assets are inseparable (i.e., both the lettings are composite and not separable, e.g., letting of equipped theatre), entire rent (i.e. composite rent) will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. Nothing is charged to tax under the head “Income from house property”..
(b) In a case where, letting out of building and letting out of other assets are separable (i.e., both the lettings are separable, e.g., letting out of refrigerator along with residential bungalow), rent of building will be charged to tax under the head “Income from house property” and rent of other assets will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. This rule is applicable, even if the owner receives composite rent for both the lettings. In other words, in such a case, the composite rent is to be allocated for letting out of building and for letting of other assets.
Ans: While computing income chargeable to tax under the head “Income from house property” in the case of a let-out property, only following items can be claimed as deductions from gross annual value. It other words, deduction cannot be claimed for any expenditure incurred by the taxpayer other than following:
o Deduction on account of municipal taxes paid by the taxpayer during the year (*).
o Deduction under section 24(a) @ 30% of Net Annual Value.
o Deduction under section 24(b) on account of interest on capital borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property.
(*) Only municipal taxes paid by the owner during the year can be deduced, hence, municipal taxes due but not paid during the year cannot be deducted or taxes borne by the tenant cannot be deducted.
Ans: Yes, if the loan is taken for purchase, construction, repair, renewal or reconstruction of the house. If the loan is taken for personal or other purposes then the interest on such loan cannot be claimed as deduction.
Ans: While computing income chargeable to tax under the head “Income from house property” in case of a let-out property, the taxpayer can claim deduction under section 24(b) on account of interest on loan taken for the purpose of purchase, construction, repair, renewal or reconstruction of the property.
In case of a let-out property, there is no limit on the quantum of interest which can be claimed as deduction under section 24(b). However, in case of a self occupied property, limit is Rs. 2,00,000 or Rs. 30,000, as the case may be
Ans: Yes, if the share of each co-owner is ascertainable.
Ans: Yes. As already mentioned in the earlier FAQ, income from house property is a notional income and only in respect of one residential unit, if self occupied, it will be considered as nil. In case of the other residential unit, fair rent will have to be treated as your income and will be taxed accordingly.
Ans: The calculation will have to be made separately for each of the properties.
Ans: The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.
A Gift made to a HUF by a member of the HUF is exempted from the income tax liability of the HUF.
If the house is held for less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term Capital Gain. There are no tax exemptions for short-term Capital Gains and one needs to pay it according to the applicable tax slab.
However, if the property is sold after holding it for more than three years, it is treated as a long-term capital asset and the gain arising from it is called the long-term Capital Gain. Such gains attract a flat exemption rate of 20%.
Property is considered a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after adjusting the inflation rate, transfer and renovation charges.
The buyer needs to pay the following taxes at the time of registering the property:
o TDS or tax deduction at source on amount exceeding Rs 50 lakhs for the purchase of immovable property excluding agricultural land. The TDS must be submitted in the name of the seller.
o Stamp duty on registration
o GST as applicable. If a ready-to-use property is purchased from the seller then GST is not applicable.
A new section 194IA was inserted in the Income-tax Act, 1961 by the Finance Act, 2013. It provides for tax deduction at source on transfer of certain immovable property other than agricultural land of Rs. 50 lakh or more.As per this said provision, any person, being a transferee responsible for paying to a resident transferor by way of consideration for transfer of immovable property other than agricultural land, shall at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, is required to deduct an amount equal to 1 percent of such sum as income-tax thereon specially when the value of the immovable property is Rs. 50 lakh or more.
e-way bill is a document required to be carried by a person in charge of the conveyance carrying any consignment of goods of value exceeding fifty thousand rupees. It is generated from the GST Common Portal for e-way bill system by the persons who cause movement of goods of consignment before commencement of such movement.
Section 68 of the Central Goods and Services Tax Act 2017 requires the person in charge of a conveyance carrying any consignment of goods of value exceeding fifty thousand to carry with him e-way bill generated from portal. Rule 138 of CGST Rules, 2017 prescribes e-way bill as the document to be carried for the consignment of goods in certain prescribed cases.Hence e-way bill generated from the common portal is required.
The consignor or consigneeor transporter of the goods can generate the e-way bill. Any unregistered person can also enroll and generate the e-way bill for movement of goods for his/her own use.
The person who generates eway bill need to be a registered person on GST portal. If the transporter is not registered person under GST it is mandatory for him to get enrolled on e-waybill portal (https://ewaybillgst.gov.in) before generation of the e-way bill. For generating e-way bill, documents such as tax invoice or bill of supply or delivery challan and Transporter’s Id, who is transporting the goods with transporter document number or the vehicle number in which the goods are transported, must be available with the person who is generating the e-way bill.
Such mistake, incorrect or wrong entry in the e-way billcannot be edited or corrected. Only option is cancellation of e-way bill and generate a new one with correct details.
Certain goods are exempted from e-way bill. For all other goods e-way bill is required. Movement of handicraft goods or goods for job-work purposes under specified circumstances also requires e-way bill even if the value of consignment is less than fifty thousand rupees.
Validity of the e-way bill depends upon the distance the goods have to be transported. In case of regular vehicle or transportation modes, for every 100 KMs or part of its movement, one day validity
Validity of the e-way bill depends upon the distance the goods have to be transported. In case of regular vehicle or transportation modes, for every 100 KMs or part of its movement, one day validity has been provided. And in case of Over Dimensional Cargo vehicles, for every 20 KMs or part of its movement, one day validity is provided. And this validity expires on the midnight of last day.
Part-A Slip is a temporary number generatedafter entering all the details in PART-A. This can be shared or used by transporter or yourself later to enter the PART-B and generate the E-way Bill. This will be useful, when you have prepared invoice relating to your business transaction, but don’t have the transportation details. Thus, you can enter invoice details in Part A of eway bill and keep it ready for entering details of mode of transportation in Part B of eway bill.
If you don’t enter the vehicle number for transportation by road or transport document number forother cases,the system will show you the PART-A slip. It indicates that you have not completed the e-way bill generation process. Only when you enter the Part-B details, e-way bill willbe generated.
Part-A Slip is entry made by user to temporarily store the document details on the e-way bill system. Once the goods are ready for movement from the business premises and transportation details are known, the user can enter the Part-B details and generate the e-way bill for movement of goods. Hence, Part-B details convert the Part-A slip into e-way bill.
The person in charge of a conveyance shall carry the invoice or bill of supply or delivery challan, bill of entry as the case may beand a copy of the e-way bill number generated from the common portal.
The common portal for generation of e-way bill is https://ewaybillgst.gov.in
Yes. All the registered persons under GST need to register on the portal of e-way bill namely: www.ewaybillgst.gov.in using his GSTIN. Once GSTIN is entered, the system sends an OTP to his registered mobile number, registered with GST Portal and after authenticating the same, the system enables him to generate his/her username and password for the e-way bill system. After generation of username and password of his/her choice, he/she may proceed to make entries to generate e-way bill.
57. This is indicating that you (your GSTIN) have already registered on the e-way bill portal and have created your username and password on the e-way bill system. Please use these credentials to log into the e-way bill system. If you have forgotten username or password, then please use the ‘Forgot Username’ or ‘Forgot Password’ facility provided on the portal to recollect your username or create new password accordingly.
This is indicating that the GSTIN entered by you is wrong or your GSTIN details isnot available in the GST Common Portal. Please check the GSTIN entered or go to the GST portal (www.gst.gov.in) and check the details of your GSTIN under ‘Search Taxpayer’ tab.
There may be some transporters, who are not registered under the Goods and Services Tax Act,but such transporters cause the movement of goods for their clients. They need to enroll on the e-way bill portal to get 15-digit Unique Transporter Id.
TRANSIN or Transporter id is 15-digit unique number generated by EWB system for unregistered transporter, once he enrols on the systemwhich issimilar to GSTIN format and is based on state code, PAN and Checksumdigit. This TRANSIN or Transporter id can be shared by transporter with his clients, who may enter this number while generating e-waybills for assigning goods to him for transportation.
The transporter is required to provide the essential information for enrolment on the EWB portal. The transporter ID is created by the EWB system after furnishing the requisite information. The details of information to be furnished is available in the user manual.
This is indicating that your account has been frozen because you might have cancelled your registration or your GSTIN has been de-activated in the GST Common Portal. Please visit the GST Common Portal (www.gst.gov.in) to find the status of your GSTIN under ‘Search Taxpayer’ tab. In case you are able to log in on GST portal but not log on e-Way Bill portal, please lodge your grievance at https://selfservice.gstsystem.in/.
This is indicating that you had tried to login to the e-way bill system with incorrect username and password for more than 5 times. Hence, the system has blocked your account for security reasons and it will be unblocked after 5 minutes.
If you have forgotten the username or password, then use the ‘Forgot Username’ or ‘Forgot Password’ facility provided on the portal to recollect your username or create new password accordingly. The user needs to enter some details after authenticating the same via an OTP, thenuser will be provided with the username and password.
All imports will be deemed as inter-State supplies for the purposes of levy of GST. IGST is leviable on imports in addition to other duties of customs. Full set-off will be available as ITC of the IGST paid on import on goods and services.
Provisions relating to refund are contained in section 54 of the CGST Act, 2017. It provides for refund of tax paid on zero-rated supplies of goods or services or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit. Identical provisions exist under the IGST Act, 2017 and relevant SGST/UTGST Acts.
In case of clearance of physician samples distributed free of cost, the ITC availed on the said samples has to be reversed in view of the provisions under Section 17(5)(h) of the CGST Act, 2017. No tax is payable on clearance of physician samples distributed free of cost as the value of supply is zero and no credit has been availed.
In case of clearance of physician samples distributed free of cost, the ITC availed on the said samples has to be reversed in view of the provisions under Section 17(5)(h) of the CGST Act, 2017. No tax is payable on clearance of physician samples distributed free of cost as the value of supply is zero and no credit has been availed.
In such cases, the manufacturer may issue a credit note within the time specified in sub-section (2) of section 34 of the CGST Act, 2017 subject to the condition that the person returning the expired medicines reduces his ITC. Subsequently, when the time expired goods are destroyed, the manufacturer has to reverse his ITC on account of goods being destroyed. Where the goods are returned after the time limit specified in section 34(2) of the CGST Act, 2017, the registered person returning the goods shall issue a tax invoice, as it is a supply within the meaning of Section 7 of the CGST Act, 2017.
In terms of Section 15(3) of the CGST Act, 2017, the value of supply for charging GST shall not include any discount which is given before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply. The value of supply shall also not include any discount which is given after the supply has been effected, if such discountis established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices and ITC attributable to such discount has been reversed by the recipient of the supply.
The e-commerce operator is required to collect an amount at the rate of one percent (0.5% CGST + 0.5% SGST) of the net value of taxable supplies made through it, where the consideration with respect to such supplies is to be collected by such operator. The amount so collected is called as Tax Collection at Source (TCS). (Refer to Section 52(1) of the CGST Act, 2017.)
The amount collected by the operator is to be paid to the government within 10 days after the end of the month in which amount was so collected. (Refer to Section 52(3) of the CGST Act, 2017.)
The amount of TCS paid by the operator to the government will be reflected in the GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the operator. The same can be used at the time of discharge of tax liability in respect of the supplies made by the actual supplier. (Refer to Section 52(7) of the CGST Act, 2017.)
A person who is required to pay tax under reverse charge has to compulsorily register under GST. The threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for special category States) is not applicable in such case.
You shall be granted a single registration in the State/UT. However, you have the option to take separate registration for each of your business verticals (as defined in section 2(18) of the CGST Act, 2017) in the State/UT.
To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”.
Rental income in the hands of owner is charged to tax under the head “Income from house property”. Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged to tax under the head “Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.
Composite rent includes rent of building and rent towards other assets or facilities. The tax treatment of composite rent is as follows:-
o In a case where letting out of building and letting out of other assets are inseparable (i.e., both the lettings are composite and not separable, e.g., letting of equipped theatre), entire rent (i.e. composite rent) will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. Nothing is charged to tax under the head “Income from house property”..
o In a case where, letting out of building and letting out of other assets are separable (i.e., both the lettings are separable, e.g., letting out of refrigerator along with residential bungalow), rent of building will be charged to tax under the head “Income from house property” and rent of other assets will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. This rule is applicable, even if the owner receives composite rent for both the lettings. In other words, in such a case, the composite rent is to be allocated for letting out of building and for letting of other assets.
In such a case, composite rent includes rent of building and charges for different services (like lift, watchman, water supply, etc.): In this situation, the composite rent is to be bifurcated and the sum attributable to the use of property will be charged to tax under the head “Income from house property” and charges for various services will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources” (as the case may be)
The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.
Ans. 1) As per the clause 5(b) of the Schedule II of CGST, Act, 2017, construction of a flat / house / complex intended for saleis a supply of service. However, if the entire consideration towards the Flat/House/complex is received after the receipt ofcompletion/occupancy certificate from the competent authority or after its first occupation, whichever is earlier, then suchactivity is neither a supply goods nor a supply of Service, as provided under Clause 5 of Schedule-III of CGST Act, 2017.
Accordingly, a transaction involving sale of such immovable property after initial occupation or after receipt of occupancycertificate, is a sale of immovable property and it does not attract GST.
Ans. 2):- The sale of “Land” (being an immovable property, which is neither Goods nor Service as per GST law) does not attractGST, as provided under Clause 5 of schedule III of the CGST Act, 2017.
Ans. 3:- As per Sl. No. 3(i) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 construction of residential complexattracts GST @18% [CGST @ 9% and SGST @ 9%] {which includes construction of complex, building, civil structure or a partthereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire considerationhas been received after issuance of completion certificate, where required, by the competent authority or after its firstoccupation, whichever is earlier}. However, as the supply of service in relation to construction of Flat/House/Complex also involves transfer of“land/undivided share of land” which do not attract GST, the value of such land/undivided share of land shall be deemed to be1/3rd of the total amount charged for such supply, as provided in Para 2 of the said Notification. No:11/2017-CT ( R) dt: 28.06.2017.
This implies that Flat/House/Complex would works out to be 12% of the total consideration inclusive of the value of land/ undivided share of land.
-The following exemptions are available to the construction services, under GST law:
1. Services provided by way of pure labour contractsof construction, erection, commissioning,installation, completion, fitting out, repair,maintenance, renovation, or alteration of a civilstructure or any other original works pertainingto the beneficiary-led individual houseconstruction or enhancement under the Housing forAll (Urban) Mission or Pradhan Mantri AwasYojana. (Sl. No. 10of Not. No.12/2017-CT(Rate)dated28.06.2017)
2. Services by way of pure labour contracts ofconstruction, erection, commissioning, orinstallation of original works pertaining to asingle residential unit otherwise than as a partof a residential complex.(Sl. No. 11of Not. No.12/2017-CT(Rate)dated28.06.2017)
Accordingly, the services of construction of residential complexes (without material) under the above specified Government schemes or construction of single residential unit other than as a part of a residential complex (without material) are exempted from GST.
Apart from the above, the services rendered by the departments of the Central/State Governments, Union Territories and local authorities (E.g.: CPWD or State PWD) to other Central/State Governments, Union Territories and local authorities (Recipients) are fully exempted as per Entry No. 8 of Notification. No. 12/2017-CT (Rate) dated 28.06.2017.
The builders/developers are entitled to avail credit on the goods (i.e. inputs as well as capital goods) and input servicesused or intended to be used in the course or furtherance of their business, subject to the conditions provided in Section 16 read with Section 17(5) of the CGST Act, 2017. Accordingly Builders/Developers are eligible to avail ITC of the GST paid on goods viz., inputs like: sand, Gravel, Cement, steel, electrical cables, switches etc.; and Capital Equipment like: Mixer, Crane etc.; and input-services Viz: Architectural services like Designing, drawing etc.; Manpower Supply Service etc.
Further, GST paid on sub-contracted construction services (with or without material) by other sub-contractors (suppliers) to whom certain construction services are outsourced, is also available as ITC as the same do not fall under clauses (c) and (d) of Section 17(5) of CGST Act, 2017. The sub-contractors are independent taxable persons as per GST law.
In terms of Sec. 17(5) (a)(ii) of the CGST Act, 2017, Input Tax Credit is allowed on Tippers and Dumpers which qualify as Motor Vehicles (under Clause (28) of Section 2 of the Motor Vehicle Act, 1988 read with Section 2(76) of the CGST Act, 2017) used for transportation of goods. Thus, the restrictions
Transfer of inputs or capital equipment of the builder/developer from one location to another location within a state for undertaking construction activity under the same registration, is not a taxable supply; hence such transfer can be made without payment of GST; and under a delivery challan. It may be noted that the builder/ developer who is not required to take registration in a different state (providing inter-state supplies and not having a place of business in the other state); and is required to transfer his capital equipment Services provided by way of pure labour contracts or inputs, is not liable to pay GST; hence such capital equipment or inputs can be transferred under a delivery challan.
However, in terms of the Section 25(4) of the CGST Act, 2017, a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory, shall, in respect of each such registration, be treated as distinct persons for the purposes of GST. Further, as per clause 2 of Schedule-I to the CGST Act, 2017 supplies between such distinct persons, even without consideration, are taxable supplies.
Accordingly, in a case where the builder/developer having two different registrations for differentbranches/ sites with in a state/UT or in different states/UTs, then they are two distinct persons for GST; therefore, transfer of inputs/capital equipment between them would be treated as a taxable supply; and hence attract GST.
However, GST paid on such supplies can be taken as Input Tax Credit by the recipient. The valuation of such supplies of shall be as per provisions of Sections 15 and 18(6) of CGST Act, 2017 read with Rule 28 of CGST Rules, 2017.
In terms of the provisions of Section 17(2) of the CGST Act, 2017, where the goods or services or both are used by the registered person partly for effecting taxable supplies and partly for effecting exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies. Further, sale of flats after issuance of completion certificate without payment of GST in terms of clause 5 of schedule-III to CGST Act are exempt supplies for the purpose of Section
In view of the above, Input Tax Credit in the above mentioned situation would be restricted to the amount as is attributable to the taxable supplies (flats on which GST is liable to be paid). The method of attribution of eligible ITC has been prescribed under the provisions of Rules 42 (for inputs and input services) and Rule 43 (for capital goods) of the CGST Rules, 2017.
No. As per Notification No. 15/2017-CT (Rate) dated 28.06.2017 issued under the provisions of Section 54(3) of the CGST Act, 2017, refund of un-utilised input tax credit is not allowed in respect of the construction services covered under clause 5(b) of schedule-II to CGST Act, 2107.
In terms of Section 140(3) of the CGST Act, 2017, credit of eligible duties is allowed to the suppliers of construction services (builders/developers who were availing abatement in terms of Notification. No. 26/2012-ST dated 20th June, 2012) in respect of the inputs lying in stock as on 01.07.2017 provided that:
(i) such inputs or goods are intended to be used for making taxable supplies;
(ii) the said registered person is eligible for input tax credit on such inputs;
(iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under CENVAT Credit Rules, 2004, in respect of such inputs; and
(iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day i.e., 1.7.2017.
Ans. No. Provisions of composition levy as envisaged under Section 10 of the CGST Act, 2017 are not applicable to supply of services (except supply of restaurant services).
As per the entry at Sl. No. 4 of Notification no.12/2017-CT(R) the services by Central Government, State Government, Union Territory, Local Authority or Governmental Authority by way of any activity in relation to any function entrusted to a municipality under Article 243 W of the Constitution, are exempted.
“Regulation of land-use and construction of buildings” is listed as one of the functions entrusted to Municipality at Sl.No. (b) of 12th schedule under Art. 243W of the Constitution. Since the subject Layout Charges/ Development Charges; plotting / land conversion charges, are collected under the authority of the respective state legislation, in relation to the said functions under Art. 243W, the said charges for the concerned services are exempted under sl.no.4 of Notification No. 12/2017-CT (R) dtd: 28.06.2017.
Hence, such charges collected by municipality/town planning/ Revenue authorities, including HMDA, VUDA etc., GST is not liable to be paid, since the such charges are collected for the services in relation to the functions under Art. 243W of the Indian Constitution.
No. In terms of Section 142 (11) (b) of the CGST Act, 2017, GST is not payable to the extent of the Service Tax was paid / payable under the provisions of chapter-V of the Finance Act, 1994. Nevertheless, the leviability of Service Tax on the subject services shall be determined by applying the Point of Taxation Rules 2011 as per which if services have been provided or deemed to have been provided on or before 30.06.2017, no GST is payable on the same.
Charges towards preferential location/floor/facing, parking facility, firefighting installation, transformer, Gen-set facility etc., collected by the builders/developers also attract GST as applicable to the principal supply (construction service) as they are naturally bundled and supplied in conjunction with the construction service. Therefore, GST at the rate of 18% on 2/3rd of the Value for such naturally bundled services is payable on the said charges also.
The builder/developer is liable to pay GST even on the share of the land owner and given in lieu of the land received for the development, besides GST on the builder/developer’s share of the complex/building.
In the above transaction, the builder/developer receives consideration for the construction service provided by him, from two categories of service receivers: (a) from landowner: in the form of land/development rights; and (b) from other buyers: normally in cash. Thus the builder is liable to pay GST not only on his portion of the complex/building, but also on the share of the land owner.
As stated in the answer to the preceding question, GST is liable to be paid by the builder/developer on the share of the land owner, also. GST is liable to be paid when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument (e.g. allotment letter).
The value of the flats/portion of the building supplied to the land owner by the developer/builder has to be determined under the provisions of Section 15 of the CGST Act, 2017 read with Rules governing Valuation as envisaged under Rules 27 to 35 of the CGST Rules, 2017.
In terms of Rule 27 of CGST Rules, 2017, where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall:
- be the open market value of such supply;
- if the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply;
- if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services or both of like kind and quality; In view of the above provisions, the value of supply of those flats would be equal to the value of similar flats charged by the builder/developer from the buyers of his share of flats. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax.
With effect from 01-04-2019, effective rate of GST applicable on construction of residential apartments by promoters in a real estate project are as under:
The above rates are applicable to construction of residential apartments in a project which commences on or after 01-04-2019 as well as on-going projects. However, in case of on-going project, the promoter has an option to pay GST at the old rates, i.e. at the effective rate of 8% on affordable residential apartments and effective rate of 12% on other than affordable residential apartments and, consequently, to avail permissible credit of inputs taxes.
| Description | Effective rate of GST* |
| Construction of affordable residential apartments | 1% without ITC on total consideration. |
| Construction of residential apartments other than affordable residential apartments | 5% without ITC on total consideration. |
Affordable residential apartment is a residential apartment having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than forty five lakhs rupees.
In an ongoing project in respect of which the promoter has opted for new rates, the term also includes apartments being constructed under the specified housing schemes of Central or State Governments.
[Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their geographical limits prescribed by Government.]
A project which meets the following conditions shall be considered as an ongoing project.
(a) Commencement certificate for the project, where required, has been issued by the competent authority on or before 31st March, 2019, and it is certified by a registered architect, chartered engineer or a licensed surveyor that construction of the project has started (i.e. earthwork for site preparation for the project has been completed and excavation for foundation has started) on or before 31st March, 2019.
(b) Where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is to be certified by any of the authorities specified in (a) above that construction of the project has started on or before the 31st March, 2019.
(c) Completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019.
(d) Apartments of the project have been, partly or wholly, booked on or before 31st March, 2019.
Yes, but such an option is available in the case of an ongoing project. In case of such a project, the promoter or builder has option to pay GST at old effective rate of 8% and 12% with ITC.
To continue with the old rates, the promoter/ builder has to exercise one time option in the prescribed form and submit the same manually to the jurisdictional Commissioner by the 10th of May, 2019.
Construction of residential apartments in projects commencing on or after 01.04.2019 shall compulsorily attract new rate of GST @ 1% or 5% without ITC.
With effect from 01-04-2019, effective rate of GST, after deduction of value of land or undivided share of land, on construction of commercial apartments [shops, godowns, offices etc.] by promoter in real estate project are as under:
| Description | Effective rate of GST* |
| Construction of commercial apartments in a Residential Real Estate Project (RREP), as explained in question no. 6 below, which commences on or after 01-04-2019 or in an ongoing project inrespect of which the promoter has opted for new rates effective from 01-04-2019 | 5% without ITC on total consideration |
| Construction of commercial apartments in a Real Estate Project (REP) other than Residential Real Estate Project (RREP) or in an ongoing project in respect of which the promoter has opted for old rates | 12% with ITC on total consideration. |
A “Residential Real Estate Project” means a “Real Estate Project” 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 project.
Construction of a project shall be considered to have been started on or before 31st March, 2019, if the earthwork for site preparation for the project has been completed, and excavation for foundation has started on or before the 31st March, 2019.
A promoter shall purchase at least eighty percent. of the value of input and input services, from registered suppliers. For calculating this threshold, the value of services by way of grant of development rights, long term lease of land, floor space index, or the value of electricity, high speed diesel, motor spirit and natural gas used in construction of residential apartments in a project shall be excluded.
Promoter has to pay GST @ 18% on reverse charge basis on all such inward supplies (to the extent short of 80% of inward supplies from registered supplier) except cement on which tax has to be paid (by the promoter on reverse charge basis) at the applicable rate, which at present is 28% (CGST 14% + SGST 14%).
Yes. All the specified conditions against clause (i) to (id) of Sl. No 3 of Notification No. 11/2017- CTR are mandatory.
Supply of TDR or FSI or long term lease of land used for the construction of residential apartments in a project that are booked before issue of completion certificate or first occupation is exempt.
Supply of TDR or FSI or long term lease of land, on such value which is proportionate to construction of residential apartments that remain un-booked on the date of issue of completion certificate or first occupation, would attract GST at the rate of 18%, but the amount of tax shall be limited to1% or 5%of value of apartment depending upon whether the residential apartments for which such TDR or FSI is used, in the affordable residential apartment category or in other than affordable residential apartment.
TDR or FSI or long term lease of landused for construction of commercial apartments shall attract GST of 18%.
The above shall be applicable to supply of TDR or FSI or long term lease of land used in the new projects where new rate of 1% or 5% is applicable.
The promoter is liable to pay GST on TDR or floor space index supplied on or after 01-04-2019 on reverse charge basis.
On long term lease received on or after 1.4.2019, the promoter should discharge his tax liability on long term lease as under: In case of supply of long term lease of land for construction of commercial apartments, tax shall be paid by the promoter immediately.
However, for construction of residential apartment, liability to pay tax onthe upfront amount payable for long term lease shall arise on the date of issuance of Completion Certificate.
Section 35(5) provide for GST audit in case the turnover is more than prescribed limit. Rule 80(3)provide for threshold of turnover as Rs. 2 Crore.
Rule 80(3) provide for aggregate turnover. Section 2(6) of CGST Act defines the aggregate turnover. It provides that aggregate turnover shall be calculated PAN wise. It means that once the turnover of a PAN is more than Rs. 2Cr all entities under that PAN will be liable for GST audit.
The penalty for not conducting GST audit is Rs. 100 per day limited to 0.25% of turnover.
Last date for GST audit as such is not given. But last date to file annual return is 31st December. This will also be applicable for audit report.
The prescribed form for audit report is Form GSTR 9C. This form is having two parts , first is reconciliation and second is certification.
It is mainly divided into two parts, Reconciliation and certification.
Reconciliation part can be divided into 4 parts.
Table5,6 are for Gross turnover.
Table 7,8 are for taxable turnover.
Table9,10,11 are for rate wise liability.
Table 12,13,14,15,16 are for input tax credit.
Part V for auditor’s recommendation.
Certification part have two scenarios.
First the case when the audit is done by the person preparing the reconciliation statement.
Second the case when the audit is done by some other person.
Section 2(13) of CGST Act defines the audit as:
“audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder.
Yes. Audit will be required even if the business was in operations only for a part of year. This is subject to the turnover of business. If the turnover is more than Rs. 2 Cr audit is mandatory.
As a taxpayer has to pay tax on self-assessment basis, a request for paying tax on provisional basis has to come from the taxpayer which will then have to be permitted by the proper officer. In other words, no tax officer can suo-moto order payment of tax on provisional basis. This is governed by section 60 of CGST/SGST Act. Tax can be paid on a provisional basis only after the proper officer has permitted it through an order passed by him. For this purpose, the taxable person has to make a written request to the proper officer, giving reasons for payment of tax on a provisional basis. Such a request can be made by the taxable person only in such cases where he is unable to determine:
a) the value of goods or services to be supplied by him, or
b) determine the tax rate applicable to the goods or services to be supplied by him.
In such cases the taxable person has to execute a bond in the prescribed form, and with such surety or security as the proper officer may deem fit.
The proper officer has to first issue a notice to the defaulting taxable person under section 46 of CGST/SGST Act requiring him to furnish the return within a period of fifteen days. If the taxable person fails to file return within the given time, the proper officer shall proceed to assess the tax liability of the return defaulter to the best of his judgement taking into account all the relevant material available with him. (Section 62)
The best judgment order passed by the Proper Officer under section 62 of CGST/SGST Act shall automatically stand withdrawn if the taxable person furnishes a valid return for the default period (i.e. files the return and pays the tax as assessed by him), within thirty days of the receipt of the best judgment assessment order.
The time limit for passing an assessment order under section 62 or 63 is five years from the due date for furnishing the annual return.
Section 63 of CGST/SGST Act provides that in such a case, the proper officer can assess the tax liability and pass an order to his best judgment for the relevant tax periods. However, such an order must be passed within a period of five years from the due date for furnishing the annual return for the financial year to which non-payment of tax relates.
A taxable person, against whom a summary assessment order has been passed, can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner within thirty days of the date of receipt of the order. If the said officer finds the order erroneous, he can withdraw it and direct the proper officer to carry out determination of tax liability in terms of section 73 or 74 of CGST/SGST Act. The Additional/Joint Commissioner can follow a similar course of action on his own motion if he finds the summary assessment order to be erroneous (section 64 of CGST/SGST Act).
There are three types of audit prescribed in the GST Act(s) as explained below:
(a) Audit by Chartered Accountant or a Cost Accountant: Every registered person whose turnover exceeds Rs. Two crore, shall get his accounts audited by a chartered accountant or a cost accountant. (Section 35(5) of the CGST/SGST Act)
(b) Audit by Department: The Commissioner or any officer of CGST or SGST or UTGST authorized by him by a general or specific order, may conduct audit of any registered person. The frequency and manner of audit will be prescribed in due course. (Section 65 of the CGST/SGST Act)
(c) Special Audit: If at any stage of scrutiny, inquiry, investigations or any other proceedings, if department is of the opinion that the value has not been correctly declared or credit availed is not with in the normal limits, department may order special audit by chartered accountant or cost accountant, nominated by department. (Section 66 of the CGST/SGST Act)
Yes, prior intimation is required and the taxable person should be informed at least 15 working days prior to conduct of audit.
The author is chartered accountant and he can be reached at rsc@carajnish.in