Implication on Real Estate & other issues in GST (Amendments) - PowerPoint Presentation

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