Central Tax Notification (Rate) 04/2019 – Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.


Central Tax Notifications (Rate)

CGST Notification rate 04/2019

Title Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.
Number 04/2019
Date 29-03-2019
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1) In exercise of the powers conferred by sub-section (1) of section 11 of the
Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being
satisfied that it is necessary in the public interest so to do, on the recommendations of the
Council, hereby makes the following further amendments in the notification of the Government
of India, in the Ministry of Finance (Department of Revenue), No.12/2017- Central Tax (Rate),
dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3,
Sub-section (i), vide number G.S.R. 691(E), dated the 28th June, 2017, namely:-

In the said notification, –

(i) in the opening paragraph, for the word, brackets and figures “sub-section (1) of section 11”
the word, brackets and figures “, sub-section (3) and sub-section (4) of section 9, sub-section (1)
of section 11,sub-section (5) of section 15 and section 148,” shall be substituted;

(ii) in the Table, –

(a) after serial number 41 and the entries relating thereto, the following serial numbers and
entries shall be inserted, namely:

(1) (2) (3) (4) (5)
41A Heading 9972

Service by way of transfer of development rights (herein refer
TDR) or Floor Space Index (FSI) (including additional FSI) on or after 1 st
April, 2019 for construction of residential apartments by a promoter in a
project, intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion
certificate, where required, by the competent authority or after its first
occupation, whichever is earlier.

The amount of GST exemption available for construction of
residential apartments in the project under this notification shall be
calculated as under: [GST payable on TDR or FSI (including additional FSI) or
both for construction of the project] x (carpet area of the residential
apartments in the project ÷ Total carpet area of the residential and commercial
apartments in the project )

 Nil

Provided that the promoter shall be liable to pay tax at the
applicable rate, on reverse charge basis, on such proportion of value of
development rights, or FSI (including additional FSI), or both, as is
attributable to the residential apartments, which remain unbooked on the date
of issuance of completion certificate, or first occupation of the project, as
the case may be, in the following manner –

[GST payable on TDR or FSI (including additional FSI) or both
for construction of the residential apartments in the project but for the
exemption contained herein] x (carpet area of the residential apartments in the
project which remain un- booked on the date of issuance of completion
certificate or first occupation ÷ Total carpet area of the residential
apartments in the project)

Provided further that tax payable in terms of the first proviso
hereinabove shall not exceed 0.5 per cent. of the value in case of affordable
residential apartments and 2.5 per cent. of the value in case of residential
apartments other than affordable residential apartments remaining un- booked on
the date of issuance of completion certificate or first occupation.

The liability to pay central tax on the said portion of the
development rights or FSI, or both, calculated as above, shall arise on the
date of completion or first occupation of the project, as the case may be,
whichever is earlier.
41B Heading 9972

Upfront amount (called as premium, salami, cost, price,
development charges or by any other name) payable in respect of service by way
of granting of long term lease of thirty years, or more, on or after
01.04.2019, for construction of residential apartments by a promoter in a
project, intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion
certificate, where required, by the competent authority or after its first
occupation,whichever is earlier.

The amount of GST exemption available for construction of
residential apartments in the project under this notification shall be
calculated as under:

[GST payable on upfront amount (called as premium, salami,
cost, price, development charges or by any other name) payable for long term
lease of land for construction of the project] x (carpet area of the
residential apartments in the project ÷ Total carpet area of the residential
and commercial apartments in the project).

 Nil

Provided that the promoter shall be liable to pay tax at
the applicable rate, on reverse charge basis, on such proportion of upfront
amount (called as premium, salami, cost, price, development charges or by any
other name) paid for long term lease of land, as is attributable to the
residential apartments, which remain un- booked on the date of issuance of
completion certificate, or first occupation of the project, as the case may be,
in the following manner –

[GST payable on upfront amount (called as premium, salami,
cost, price, development charges or by any other name) payable for long term
lease of land for construction of the residential apartments in the project but
for the exemption contained herein] x (carpet area of the residential
apartments in the project which remain un- booked on the date of issuance of
completion certificate or first occupation ÷ Total carpet area of the
residential apartments in the project);

Provided further that the tax payable in terms of the first
proviso shall not exceed 0.5 per cent. of the value in case of affordable
residential apartments and 2.5 per cent. of the value in case of residential
apartments other than affordable residential apartments remaining un- booked on
the date of issuance of completion certificate or first occupation.

The liability to pay central tax on the said proportion of
upfront amount (called as premium, salami, cost, price, development charges or
by any other name) paid for long term lease of land, calculated as above, shall
arise on the date of issue of completion certificate or first occupation of the
project, as the case may be.

(iii) after paragraph 1, the following paragraphs shall be inserted, namely, –

“1A. Value of supply of service by way of transfer of development rights or FSI by a person to
the promoter against consideration in the form of residential or commercial apartments shall be
deemed to be equal to the value of similar apartments charged by the promoter from the
independent buyers nearest to the date on which such development rights or FSI is transferred to
the promoter.

1B. Value of portion of residential or commercial apartments remaining un-booked on the date
of issuance of completion certificate or first occupation, as the case may be, shall be deemed to
be equal to the value of similar apartments charged by the promoter nearest to the date of
issuance of completion certificate or first occupation, as the case may be.”

(iv) in paragraph 3 relating to Explanation, after clause (iv), the following clause shall be
inserted, namely: –

(v) The term “apartment” shall have the same meaning as assigned to it in clause (e) under
section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).
4

(vi) The term “affordable residential apartment” shall have the same meaning as assigned to it in
the notification No. 11/2017-Central Tax (Rate), published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 690(E)
dated 28th June, 2017, as amended.

(vii) The term “promoter” shall have the same meaning as assigned to it in clause (zk) under
section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

(viii) The term “project” shall mean a Real Estate Project or a Residential Real Estate Project.

(ix) the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in clause
(zn) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

(x) The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet
area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the
apartments in the REP;

(xi) The term “carpet area” shall have the same meaning as assigned to it clause (k) under
section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

(xii) “an apartment booked on or before the date of issuance of completion certificate or first
occupation of the project” shall mean an apartment which meets all the following three
conditions, namely-

(a) part of supply of construction of the apartment service has time of supply on or before
the said date; and

(b) consideration equal to at least one instalment has been credited to the bank account of
the registered person on or before the said date; and

(c) an allotment letter or sale agreement or any other similar document evidencing booking
of the apartment has been issued on or before the said date.

(xiii) “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor
area) to the size of the piece of land upon which it is built.”.

2)This notification shall come into force with effect from the 1
st day of April, 2019.

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