GST on the construction of residential and commercial properties is 18% currently. When it comes to smaller projects specifically, some clients aren't willing to pay an extra 18% on the entire project cost. At the same time, it is hard to stay competitive with other players who don't claim gst. What can be an alternative?
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GST on Construction alternative
Replies (4)
Big residential projects waive a certain portion of gst which they receive as input credit from their counterparts.
Hello, thank you for this. Can you please elaborate or direct to the relevant provision/section so I can read more about it?
Construction of residential projects is presently 1.5% or 7.5% without ITC benefit.
Where the customer is not willing to pay entire GST, as a business decision, you can bear a portion of GST so that the customer pays the balance.
Dear Ria.
As per Notification 11/2017 CT (rate)
Construction of affordable residential apartments: Rate is 1.5 percent without ITC (Deduction of value of land 1/3rd . so 1.5X2/3 comes to 1% without ITC).
Construction of residential apartments other then affordable residential apartments : Rate is 7.5 % (Deductible 1/3rd value of undivided share of land. so 7.5 x 2÷3 comes to 5% without ITC)
so as per your query you do not cover under the construction services provided as in capacity of promotor in Residential Real Estate Projects (RREP) . You are providing construction services as work contractor (ie individual house construction) so in that case the rate is 18% with ITC.
So as such yes its hard to survive kind of your business model.
Note : Recipient of your services (Construction services) cannot claim ITC.
As per Notification 11/2017 CT (rate)
Construction of affordable residential apartments: Rate is 1.5 percent without ITC (Deduction of value of land 1/3rd . so 1.5X2/3 comes to 1% without ITC).
Construction of residential apartments other then affordable residential apartments : Rate is 7.5 % (Deductible 1/3rd value of undivided share of land. so 7.5 x 2÷3 comes to 5% without ITC)
so as per your query you do not cover under the construction services provided as in capacity of promotor in Residential Real Estate Projects (RREP) . You are providing construction services as work contractor (ie individual house construction) so in that case the rate is 18% with ITC.
So as such yes its hard to survive kind of your business model.
Note : Recipient of your services (Construction services) cannot claim ITC.
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