Implication on Real Estate amp other issues in GST Amendments Notifications and other material 2 NN No Amended Sections Gist 032019CTRate dt 29032019 N No 112017 CT Rate 91 34 111 155 161 amp 148 ID: 768514
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Implication on Real Estate & other issues in GST (Amendments)
Notifications and other material 2 NN No. Amended Sections Gist 03/2019-CT(Rate) , dt . 29-03-2019 N No. 11/2017 - CT (Rate) 9(1), (3),(4), 11(1), 15(5) , 16(1) & 148 New rates for Real estate sector, ITC calculation 04/2019-CT(Rate) , dt . 29-03-2019 N No. 12/2017 - CT (Rate) Section 11(1) Exemption to DR+FSI and LT Lease for residential apartments 05/2019-CT(Rate) , dt . 29-03-2019 N No. 13/2017 - CT (Rate) Section 9(3) RCM services: DR+FSI and LT Lease (upfront + periodic) 06/2019-CT(Rate) , dt . 29-03-2019 NA Section 148 Time of supply for DR+FSI, Upfront LT Lease and Construction service to land owner agst DR+FSI 07/2019-CT(Rate) , dt . 29-03-2019 NA Section 9(4) notify certain services to be taxed under RCM under section 9(4) of CGST Act as recommended by 08/2019-CT(Rate) , dt . 29-03-2019 N No. 1/2017- CT (Rate) Section 9(1) and 15(5) notify CGST rate of certain goods as recommended by Goods and Services Tax Council for real estate sector. 16/2019-CT , dt . 29-03-2019 CGST Rules Section 164 Input tax credit and others with forms Order No. 4/2019 – CT ROD Section 172 Credit attribution on area basis of the area of the construction
Highlights of New Scheme 3
Highlights of New Scheme 4
Rate Change or Business Change!! 5
Impact areas on project in Transition and New 6
Impact on Sale Price of the project 7
Exclusive GST Contract 8 Particulars Value GST Total Before 01.04.2019 Cost per sq. ft. of unit 1,200/- 96/- (8%) 1,200/- Selling Rate per sq. ft. of unit 2,000/- 160/- (8%) 2,160/- From 01.04.2019 Cost per sq. ft. of unit 1,200/- 96/- (8%) 1296/- Selling Rate per sq. ft. of unit 2,000/- 20/- (1%) 2,020/- OR 2,116/-?
Inclusive GST Contract 9 Particulars Value GST Total Before 01.04.2019 Cost per sq. ft. of unit 1,200/- 96/- (8%) 1,200/- Selling Rate per sq. ft. of unit 2,160/- 160/- (8%) 2,160/- From 01.04.2019 Cost per sq. ft. of unit 1,200/- 96/- (8%) 1296/- Selling Rate per sq. ft. of unit 2,160/- or 2020/-or 2,116/- 20/- (1%) 2,160/- or 2020/-or 2,116/-
Concept of Implied Contract 10
Implied Contract Section 9 of Contract Act: Promises, express and implied In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied . Southern Foundries (1926) Ltd v Shirlaw 'Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying ; so that, if while the parties were making their bargain an officious by-stander were to suggest some express provision for it in their agreement, they would testily suppress him with a common, 'Oh, of course' . Section 171 CGST Act: Anti-profiteering measure Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices. 11
Real Estate Transactions 12
Real Estate Transactions 13
Construction Service 14
Definitions 15
Affordable Residential Apartment 16
80IBA v/s GST 17
Ongoing Project & Project which commences on or after 1 st April, 2019 18
Residential and Commercial Apartment Residential: an apartment intended for residential use as declared to the RERA Commercial: Other than residential 19
Commencement certificate The commencement certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan. 20
Identify Project!! 21
Identify Project!! Multistorey Ltd. has a plot of land admeasuring 6000 sqmt. It had planned to construct 2 towers on it in 2 phases. Phase 1, Construction has been started in January 2018 for first tower, which is under construction as of now. Phase 2, Construction of Second tower will start in January 2020. How many projects are there? 22
Rates 23
Rate Summary 24
Conditions for New Rates 25
Conditions for New Rates 26
Condition of 80% Procurement 27
Conditions for New Rates 28
Conditions for New Rates: Pay under RCM 29
Illustration: 1 30
Illustration 2 31
Developer & Land owner Condition 32
Major Types of Development Agreements 33
Developer Condition w.e.f. 01.04.2019 34
Land owner Condition w.e.f. 01.04.2019 35
Rate of tax for Contractors 36
Composite supply of works contract 37
Development Rights/ LT Lease 38
Are Development Rights taxable? 39
RCM for Promoter [Sec. 9(3)/5(3)] 40
Exemption for DR/LT Lease 41
REVERSAL in case of Sale of Units post Completion 42
Removal of Difficulty Order 43
Case Studies 44
Questions Whether all the apartments in a project has to satisfy the condition of affordable housing in order to avail the concessional effective rate of 1% on the affordable residential apartment? Whether the Landlord be eligible to avail input tax credit on the construction services which are taxable at the effective of rate of 1% and 5% in an on-going project? Whether a sub-contractor or any other person who is only providing construction services and is not involved in sale can claim the above concessional rates of tax? 45
Gross Amount Charged Mr. C (builder) sells a residential apartment to Mr. D(before obtaining CC) at Rs. 40 lakhs (excluding GST). He charges an additional amount towards preferential location charges. Comment on GST rate if: Case 1: Preferential charges constitute Rs. 2.75 lakhs Case 2: Preferential charges constitute Rs.8 lakhs 46
Computation of Reversal 47
Thank You 48