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

Nagaraj

Nagaraj (Querist)
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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)
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05 July 2024 Paying 18% within 80% is the solution.
Claim ITC.

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