GST cannot be levied on the immovable property. However, there is a basic concept laid by law that states that unless an Occupation Certificate (OC) received, GST will be levied as it will be constitute availing Construction Services and not the purchase of Immovable Property.
*This article details the GST on Real Estate Properties After 01.04.2019
With Effect from 01.04.2019 , rate of GST on Construction Service which also involves transfer of property in land will be as follows:
Residential Apartments
Affordable Residential Apartment - GST @1% Without ITC to Builder/Developer
Other Residential Apartment - GST @5% Without ITC to Builder/Developer
Commercial Properties
Residential Real Estate Projects - GST@ 5% Without ITC
Other Commercial Properties - GST@ 12% Without ITC
Lets Understand each type of Property :
Affordable Residential Apartment Meaning and Conditions for 1% GST Rate :
Carpet area upto 60 square meter in metropolitan cities and upto 90 square meter in cities or towns other than metropolitan cities
Gross amount charged by the builder is not more than forty-five lakhs rupees (gross amount includes all charges excluding stamp duty , advance maintennace/ deposits for common amenities)
Land Value of 1/3rd shall be considered as exempt
Atleast 80% of the inputs and input services shall be from Registered Suppliers
Residential Real Estate Projects for 5% GST Rate :
Either Commence after 01.04.2019 or
Ongoing Project in which 1% GST Rate is opted by the Builder / Developer / Promoter
Commercial apartments is not more than 15 percent of the total carpet area of all the apartments in the project
Lets Get Answer to Some of Your Questions:
If value of purchases as prescribed above from registered supplier is less than 80%, what would be the applicable GST rate on such purchases?
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%)
Who is liable to pay GST on TDR and floor space index?
The promoter is liable to pay GST on TDR or floor space index supplied on or after 01-04-2019 on reverse charge basis.
At what point of time, the promoter should discharge its tax liability on TDR
The liability to pay GST on development rights shall arise on the date of completion or first occupation of the project, whichever is earlier. Therefore, promoter shall be liable to pay tax on reverse charge basis, on supply of TDR on or after 01-04-2019, which is attributable to the residential apartments that remain un-booked on the date of issuance of completion certificate, or first occupation of the project.
At what point of time, the promoter should discharge its tax liability on FSI (including additional FSI).
On FSI received on or after 1.4.2019, the promoter should discharge his tax liability on FSI as under:
(i) In case of supply of FSI wherein consideration is in form of construction of commercial or residential apartments, liability to pay tax shall arise on date of issuance of Completion Certificate.
(ii) In case of supply of FSI wherein monetary consideration is paid by promoter, liability to pay tax shall arise on date of issuance of Completion Certificate only if such FSI is relatable to construction of residential apartments. However, liability to pay tax shall arise immediately if such FSI is relatable to construction of commercial apartments.
To read about how to claim GST refund in case of cancellation of flat please read here