GST ON CONTRACT FOR CONSTRUCTION OF RESIDANCE AND COMMERCIAL HOUSE

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This discussion clarifies the Goods and Services Tax (GST) applicable to construction contracts for both residential and commercial properties. Generally, a rate of 18% applies to works contracts, with specific exemptions and lower rates like 1% or 5% available for affordable housing projects. Pure labour contracts for single residential houses may be exempt, but contracts including materials, especially for improvements or commercial projects, will typically attract rates of 12% or higher, varying based on project classification and the potential to avail Input Tax Credit (ITC).

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

03 February 2023 WHAT ARE THE APPLICABLE RATES ON CONTRACT FOR CONSTRUCTION OF RESIDANCE AND COMMERCIAL HOUSE

OR IS THERE ANY EXEMPTION ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

03 February 2023 In general, 18% under works contract.
Also, for affordable housing just 1% or 5% depending upon area of construction.
While NOTIFICATION NO 12/2017 DTD 28/06/2017 WHICH STATES THAT THE PURE LABOUR CONTRACT OF SINGLE RESIDENTIAL HOUSE IS EXEMPTED FROM GST !!

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Suresh S. Tejwani

Suresh S. Tejwani (Querist)

04 February 2023 CONTRACT INCLUDES MATERIAL AS WELL AND IS FOR IMPROVMENT IN BUGLOW THEN ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

04 February 2023 In general, 12%, unless categorized under affordable housing scheme.

CA Altamush Zafar

CA Altamush Zafar (Expert)

05 February 2023 Rates will differ according to the project category. For example rates for commercial apartments in RREP and REP are different and they are also different for purely commercial projects. Availment of ITC will also depend on the nature of project

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