In case promoter of residential real estate project is paying GST at 5% or 1%.
Then 80% of value of inputs and input services other than
- Services by way of grant of development rights,
- Long term lease of land,
- FSI- Floor space index (total amount of area (on all floors) you can build upon a plot)
- Electricity,
- High speed diesel,
- Motor spirit
- Natural gas
Used in supplying the service shall be received from registered supplier only;
Provided also that inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person;
Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the project, whichever is earlier) falls short of the said threshold of 80 per cent., tax shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of 18% on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 2017 shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both;
Provided also that notwithstanding anything contained herein above, where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement at the applicable rates on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, shall apply to him as if he is the person liable for paying the tax in relation to such supply of cement;
Example No. 1
A promoter has procured following goods and services for construction of a residential real estate project during a financial year.
|
Sr. No. |
Name of input goods and services | Amount | % of input goods and services received during the financial year | Received from? |
| 1 | Sand | 10,00,000 | 10 | Registered supplier |
| 2 | Cement | 15,00,000 | 15 | Unregistered supplier |
| 3 | Steel | 20,00,000 | 20 | Registered supplier |
| 4 | Bricks | 15,00,000 | 15 | Registered supplier |
| 5 | Flooring tiles | 10,00,000 | 10 | Registered supplier |
| 6 | Architect/ designing | 10,00,000 | 10 | Registered supplier |
| 7 | Aluminum windows, Ply, commercial wood | 15,00,000 | 15 | Registered supplier |
| 8 | Paints | 5,00,000 | 5 | Registered supplier |
| TOTAL | 1,00,00,000 | 100 |
In the above given example as 85% of value of inputs and input services are from registered supplier so promoter is not required pay any tax under RCM
Example No. 2
A promoter has procured following goods and services for construction of a residential real estate project during a financial year.
| Sr. No | Name of input goods and services |
Amount |
% of input goods and services received during the financial year | Received from? |
| 1 | Sand | 10,00,000 | 10 | Unregistered supplier |
| 2 | Cement | 15,00,000 | 15 | Unregistered supplier |
| 3 | Steel | 20,00,000 | 20 | Registered supplier |
| 4 | Bricks | 15,00,000 | 15 | Registered supplier |
| 5 | Flooring tiles | 10,00,000 | 10 | Unregistered supplier |
| 6 | Architect/ designing | 10,00,000 | 10 | |
| 7 | Aluminium windows, Ply, commercial wood | 15,00,000 | 15 | Unregistered supplier |
| 8 | Paints | 5,00,000 | 5 | Registered supplier |
| TOTAL | 1,00,00,000 | 100 |
In the above given example as 50% of value of inputs and input services are from registered supplier. However, he has procured sand, cement, aluminium windows, ply and flooring tiles from unregistered supplier. Thus, value of goods and services procured from registered supplier during a financial year falls short of threshold limit of 80%. So, to comply with the above said provision promoter is required to pay tax on cement at applicable rate on RCM basis. After payment of GST on cement, on the remaining shortfall of 15% the promoter shall pay tax @18% under RCM.
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