Benefit of Lower GST rate for services of Works Contract

In case of composite supply of ‘works contract’* as defined in section 2(119) of CGST Act, 2017, other than

(i)  Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (RREP)

(ia)  Construction of residential apartments other than affordable residential apartments by a promoter in an RREP

(ib) Construction of commercial apartments (shops, offices, godowns etc.) by a promoter in an RREP

(ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (REP) other than RREP,

(id) Construction of residential apartments other than affordable residential apartments by a promoter in a REP other than a RREP

(ie) Construction of an apartment in an ongoing project under any of the schemes specified

(if) Construction of a complex, building, civil structure or a part thereof, including,- (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP,  (ii) residential apartments in an ongoing project, other than affordable residential apartments.

Note: Works Contract services supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of affordable residential apartments.

Commencement of Project:: on or after 1^st April, 2019 OR

An ongoing project not covered under (i.e.) or (if)

Rate of Tax:  CGST = 6%; SGST = 6%

Important Points:

1. Carpet area of the affordable residential apartments is not less than 50% of the total carpet area of all the apartments in the project.
2. For the purpose of determining whether the apartments at the time of supply of the service are affordable residential apartments or not, value of the apartments shall be the value of similar apartments booked nearest to the date of signing of the contract for supply of the service.
3. In case it finally turns out that the carpet area of the affordable residential apartments booked or sold before or after completion, for which gross amount actually charged was Rs.45 lacs or less and the actual carpet area was less than 50% of the total carpet area of all the apartments in the project, the promoter shall be liable to pay such amount of tax on reverse charge basis as is equal to the difference between the tax payable at the applicable rate but for the rate prescribed herein and the tax actually paid at the rate prescribed herein.

*Works Contract[section 2(119)]: A contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods(whether as goods  or in some other form) is involved in execution of such contract.