RCM on Real Estate transactions

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This discussion clarifies the Reverse Charge Mechanism (RCM) for real estate promoters regarding the requirement to procure at least 80% of inputs and services from registered persons. It addresses whether labour payments, paint, and carpenter services fall under this threshold. The consensus suggests including paint within the 80% and potentially treating labour payments (including carpenters) as part of the remaining 20%, especially if they are from unregistered persons. The advice is to pay the applicable 18% GST and claim Input Tax Credit (ITC) to manage this.

Nagaraj

Nagaraj (Querist)

02 July 2024 Dear Experts,
As per the notification requirement Promoter is required to purchase at least 80% of inputs and input services from registered person.

Promoter is making labour payments for constructions, paint, carpenter will that be included or excluded in above 80%?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

02 July 2024 Paint to be included and labour payments including carpenter may be considered under 20%.

Nagaraj

Nagaraj (Querist)

05 July 2024 In Real estate construction most of the labour payments are non gst holders, how to find solution for this or paying 18% is the only solution ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 July 2024 Paying 18% within 80% is the solution.
Claim ITC.

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