Mazars Tax Update | Edition 06.19

Indirect Tax News

CBIC has issued FAQ’s on real estate sector

 Some of the aspects covered under FAQ’s are as under:

• Applicable rates of GST on construction of residential and commercial apartments.
• Definition of affordable residential apartment, on-going project, residential real estate project.
• Availability of option with promoter to pay taxes at old rates.
• Condition of purchase of 80% goods and services from registered persons and tax implications on promoter in case of violation of such condition.
• Tax implications on transfer of development rights, FSI and long-term lease of land along with point of taxation thereon.

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AAR West Bengal in the case of Bengal Peerless Housing Development held that other service charges related to preferential location, parking, etc. will attract GST at reduced rate i.e.12%.

Facts of the Case:

• The applicant is supplying construction services to the recipients along with other services such as preferential location charges, right to use car parking space and common area facilities.

Ruling:

• AAR held that the above-mentioned services in addition to construction services will fall within the ambit of definition of “composite supply” and hence taxable at 12%.

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