The Central Board of Indirect taxes & Customs (CBIC) has released a second set of FAQs related to Goods and Services Tax on Real Estate. The second set which has been released on 14th May saw the CBIC clarifying that home-buyers will have to bear a 12% GST on the dues payable to builder if the housing project has been granted an occupation certificate by April 1, 2019.
Builders who have received completion certificate for an ongoing project before April 1, 2019, will have to charge 12 per cent GST from buyers on the balance amount due towards purchase of the flat, said a FAQ as notified by the CBIC.
For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 20.
The FAQ addressed a number of questions that home-buyers and property developers could be facing. The CBIC also answered a question on the rate of GST applicable on projects in respect of which occupation certificate have been issued prior to April 1, 2019 but balance demands were pending. The CBIC's FAQ read, "Time of supply of the service by way of construction of apartments in such projects falls prior to April 1, 2019, and accordingly the rates as existed prior to April 1, 2019, would apply to such balance demands."
On whether accumulated ITC can be adjusted against new tax liability of 5 per cent and 1 per cent, the FAQ said: "No. GST on services of construction of an apartment by a promoter at the rate of 1 per cent/ 5 per cent is to be discharged in cash only. ITC, if any, may be used for discharging any other supply of service."
In its second set of FAQs, the CBIC has clarified on a total of 27 headers or questions. This FAQ deals with area sharing arrangements, residential real estate projects, threshold value of affordable residential apartments, other development charges, calculation of GST and FSI, redevelopment/rehabilitation projects, carpet area calculations etc.
The detailed second FAQ notification can be viewed here (Opens a PDF file).
A GST Council headed by Finance Minister Arun Jaitley and other state counterparts had allowed real estate players to shift to a 5 percent GST rate for residential units and 1 percent for affordable housing units without benefit of input tax credit (ITC) from April 1, 2019. This decision was undertaken in March. Following this move, the CBIC in its first FAQ had shared clarifications with reference to GST on residential apartments, affordable apartments, on-going projects, the option for builders to pay taxes at old structure, construction of commercial shops. The first FAQ clarified on 41 headers.
Read the first notification of CBIC by clicking here.