• Clarifiction as to 12% GST pyable on construction of a house-Reg

Sir,
 I have purchased a plot measuring 1200Sq.ft from a developer , developing a gated community at Hosur, Tamilnadu.near Bengaluru.

2. Now I have to execute a contract for constructing a house measuring 1050 Sq.Ft at the rate of
 Rs.1800/- per Sqft with the above developer ..He is demanding GST 12% for construction of the house, orally.

3. As per GST Rules, the GST is payable only on sale of Under-Construction of a building or a flat , where completion certificate has not been issued by the competent authority.
4. I am under the impression that no GST is payable by me to the developer, since there is no sale is involved in the agreement for under-construction of a house or building. It is only agreement to construct a house is involved as per the terms and conditions.
5. No where in the agreement, the sale of under-construction of house aspect, is mentioned and also GST payable by me. Its only oral conversation.
6. In view of the above whether I am liable for GST taking into consideration GST input credit being availed by the developer in the construction.
7. Anticipating early reply in the matter.

Thanking you, sir. Yours sincerely,

 H.N.Divakaran.
 

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Asked 5 years ago in GST

Dear Sir 

No gst Applicable On construction of reg. House ..

Gst Applicable only construction of commercial building 

You don't pay gst on your builder.

 

M. Tosif Mansuri
CA, Banswara
2 Answers

Not rated

Hi,

- GST is applicable on the construction of the house as the services provided by the builder falls under the Works Contract service. The builder will charge GST on the value of construction only @12%, for which it is mandatory for him to issue tax invoice for the same. Under GST, value of land is considered 1/3 rd of the total value, so plan accordingly.

 

- Availability of Input of GST to builder on the raw material i.e. Cenent, bricks is different aspect. It only impacts your cost but he still needs to charge GST from you.

 

- Agreement should only be of the construction of the property because construction is considered as service. Only sale of property after receiving OC and entire consideration after receiving OC is exempted.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

- Builder is liable to pay GST on the value of labour and material provided by him and builder will charge 18% of the 2/3 rd value if the total value involves value of the land otherwise it will 18% of total value.. Please clear your definition of Works contract. According to your definition it is job work. 

 

- Please read schedule II of the Act. There is no where in the Act written about exemption in respect to construction of residential house. 

 

- It is you to clear whether Rs.1800 sq. ft includes GST or not. Also please clear from the builder also about the same thing. Might be it is cost of construction only.

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

As per my understanding, the demand raised by developer is correct.

 

The services provided by the developer is classified under work contract services.

 

Thanks & Regards,

Payal Chhajed

 

Payal Chhajed
CA, Mumbai
5188 Answers
291 Consultations

5.0 on 5.0

The tax rate will be 18% as the contractor does not include land cost in the contract value. therefore 1/3 abatement for land will not be allowed.

In case you are purchasing and supplying all materials and the contract is for labour supply only, then it is exempt supply. if the contractor purchases the materials, he can take ITC claim.

Payal Chhajed
CA, Mumbai
5188 Answers
291 Consultations

5.0 on 5.0

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