Mazars Tax Update | Edition 03.19
This newsletter is a weekly compilation of most interesting and recent news related to direct as well indirect tax.
Indirect Tax News
CBIC has extended the due date of filing ITC-04 by job worker vide Notification No.15/2019 – Central tax for the period July, 2017 to March, 2019 till 30th June, 2019.
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Amendment has been carried out in CGST Rules, 2017 vide Notification No.16/2019 – Central tax issued by CBIC
Major highlights of the amendments are:-
- Rule 42 of CGST Rules, 2017 has been amended incorporating the manner of reversal of input tax credit in case of construction services as specified under clause (b) of paragraph 5 of Schedule II of the Act on the basis of “Aggregate carpet area of apartments”.
- Rule 43 of CGST Rules, 2017 has been amended incorporating the manner of reversal of input tax credit on capital goods in case of construction services as specified under clause(b) of paragraph 5 of Schedule II of the Act on the basis of “Aggregate carpet area of apartments”.
- Rule 88A prescribing the order of utilization of input tax credit has been inserted. It is summarized here as under
SEQUENCE OF UTILISATION OF CREDIT | OUTPUT LIABILITY | ||
IGST | CGST | SGST | |
IGST | 1st preference | 2nd Preference | 2nd Preference |
CGST (if no balance left in IGST) | 2nd Preference | 1st preference | - |
SGST (if no balance left in IGST) | 2nd Preference | - | 1st preference |
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Type of Project | Category | Whether option to pay tax at old rates exercised? | Rate |
| Construction of affordable residential apartments which commences on or after 1st April, 2019 or ongoing project | No | 0.75 |
Construction of residential apartments other than affordable residential apartments which commences on or after 1st April, 2019 or ongoing project | No | 3.75 | |
Construction of commercial apartments which commences on or after 1stApril, 2019 or ongoing project | No | 3.75 | |
| Construction of affordable residential apartments which commences on or after 1st April, 2019 or ongoing project | No | 0.75 |
Construction of residential apartments other than affordable residential apartments which commences on or after 1st April, 2019 or ongoing project | No | 3.75 | |
Construction of an apartment in an ongoing project | Yes (Refer Note) | 6 | |
Construction of a complex, building, civil structure or part thereof, including:
| Yes (Refer Note) | 9 | |
Composite supply of works contract on which option to pay taxes as per old rates has not been exercised in a project which commences on or after 1st April, 2019 or ongoing project. | No | 6 | |
Supply of services other than services by way of grant of development rights or FSI by an unregistered person to a promoter for construction of project on which tax is payable under reverse charge mechanism as per section 9(4) of CGST Act, 2017. | Not applicable | 9 | |
Note: One-time option to pay tax as per old rates should be exercised by 10th May, 2019 failing which it shall be deemed that option to pay taxes as per new rates has been exercised.
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In connection with applicability of new tax rates in real estate industry, Notification No.7/2019 – Central tax rate has been issued which deals with taxability under reverse charge mechanism in hands of construction service provider on shortfall in the event of failing to procure 80% of inputs and input services from registered supplies
Category of supply of goods or services or both | Reverse charge liability on |
Inputs and input services (other than TDR/FSI, upfront premium) which comprise of shortfall from the minimum value of goods or services or both required to be purchased by a promoter from registered supplier | Promoter |
Cement which comprise of shortfall from the minimum value of goods or services or both required to be purchased by a promoter from registered supplier | Promoter |
Capital goods supplied to a promoter for construction of a project falling under any chapter in the first schedule to the Customs Tariff Act, 1975 (51 of 1975) supplied to a promoter for construction of a project | Promoter |
CBIC has notified certain rate of goods for real estate sector vide Notification No.8/2019 – Central tax rate
Supply of any goods other than capital goods and cement falling under chapter heading 2523 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975), by an unregistered person to a promoter for construction of the project on which tax is payable by the promoter as recipient of goods under section 9(4) of CGST Act, 2017 is liable to tax @9%.
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Refund related issues faced by the industry have been addressed vide Circular No.94/13/2019 – GST issued by CBIC
- Refund of eligible/ accumulated ITC on account of inverted tax structure can be claimed under the category “any other” in Form GST RFD-01A where the refund applied under inverted tax structure gets impacted through the reversal on account of ITC being lapsed in terms of specific notification.
- Merchant exporter can claim refund of unutilized ITC on account of zero rated supplies without payment of tax on which supplier has availed the benefit of notifications issued by Ministry of Finance by specifying the category of refund as “any other” in GST RFD-01A.
- In cases where deficiency memo is issued, refund can be claimed by submitting the refund application manually in GST RFD-01A.
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