Integrated Tax Notification (Rate) 03/2019 – Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.


Integrated Tax Notifications (Rate)

IGST Notification rate 03/2019

Title Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council for real estate sector.
Number 03/2019
Date 29-03-2019
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1)In exercise of the powers conferred by sub-sections (1), (3) and (4) of
section 5, subsection (1) of section 6 and clauses (iii),
(iv) and (xxv) of section 20 of the Integrated Goods and Services Tax Act, 2017
(13 of 2017) read with sub-section (5) of section 15, subsection
(1) of section 16 and section 148 of the Central Goods and Services Tax Act,
2017 (12 of 2017), the Central Government, on the recommendations
of the Council, and on being satisfied that it is necessary in the public
interest so to do, hereby makes the following further amendments in the
notification of the Government of India, in the Ministry of Finance (Department
of Revenue), No. 8/2017- Integrated 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. 683(E), dated the 28th June, 2017, namely:-

In the said notification, –

  • (i) in the opening paragraph,

(a) after the words, brackets and figures “conferred by sub-section (1),”, the words,
brackets and figures “sub-section (3) and sub-section (4)” shall respectively be
inserted;

(b) for the words, brackets and figures “clause (iii) and clause (iv)”, the words, brackets
and figures “clauses (iii), (iv) and (xxv)” shall be substituted;

(c) the word “and” after the words and figures “sub-section (5) of section 15” shall be
substituted by the symbol “,”;

(d) after the word, brackets and figures “section 16”, the words and figure “and section
148” shall be inserted;

  • (ii) in the Table, –

(a) against serial number 3, for item (i), and the entries relating thereto in column (3), (4)
and (5), the following items and entries shall be substituted, namely, –

(3) (4) (5)
“(i) Construction of affordable residential
apartments by a promoter in a Residential Real
Estate Project (herein after referred to as
RREP) which commences on or after 1
st April,
2019 or in an ongoing RREP in respect of
which the promoter has not exercised option to
pay integrated tax on construction of
apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the
manner prescribed therein, 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.

(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)

 1.5

Provided that the integrated tax at the rate
specified in column (4) shall be paid in
cash, that is, by debiting the electronic
cash ledger only;

Provided also that credit of input tax
charged on goods and services used in
supplying the service has not been taken
except to the extent as prescribed in Annexure I in the case of REP other than
RREP and in Annexure II in the case of
RREP;

Provided also that the registered person
shall pay, by debit in the electronic credit
ledger or electronic cash ledger, an
amount equivalent to the input tax credit
attributable to construction in a project,
time of supply of which is on or after 1
st
April, 2019, which shall be calculated in
the manner as prescribed in the Annexure
I in the case of REP other than RREP and
in Annexure II in the case of RREP;

Provided also that where a registered
person (landowner- promoter) who
transfers development right or FSI
(including additional FSI) to a promoter
(developer- promoter) against
consideration, wholly or partly, in the
form of construction of apartments, –

  1. the developer- promoter shall pay tax
    on supply of construction of
    apartments to the landownerpromoter,
    and
  2. such landowner – promoter shall be
    eligible for credit of taxes charged
    from him by the developer promoter
    towards the supply of construction of
    apartments by developer- promoter to
    him, provided the landownerpromoter
    further supplies such
    apartments to his buyers before
    issuance of completion certificate or
    first occupation, whichever is earlier,
    and pays tax on the same which is not
    less than the amount of tax charged
    from him on construction of such
    apartments by the developerpromoter.

Explanation. –

  1. “developer- promoter” is a promoter
    who constructs or converts a building into apartments or develops a plot for
    sale,
  2. “landowner- promoter” is a promoter
    who transfers the land or
    development rights or FSI to a
    developer- promoter for construction
    of apartments and receives
    constructed apartments against such
    transferred rights and sells such
    apartments to his buyers
    independently.

Provided also that eighty percent of value
of input and input services, [other than
services by way of grant of development
rights, long term lease of land (against
upfront payment in the form of premium,
salami, development charges etc.) or FSI
(including additional FSI), electricity,
high speed diesel, motor spirit, natural
gas], used in supplying the service shall
be received from registered supplier only;

Provided also that inputs and input
services on which tax is paid on reverse
charge basis shall be deemed to have been
purchased from registered person;

Provided also that where value of input
and input services received from
registered suppliers during the financial
year (or part of the financial year till the
date of issuance of completion certificate
or first occupation of the project,
whichever is earlier) falls short of the said
threshold of 80 per cent., tax shall be paid
by the promoter on value of input and
input services comprising such shortfall at
the rate of eighteen percent on reverse
charge basis and all the provisions of the
Integrated Goods and Services Tax Act,
2017 (13 of 2017) shall apply to him as if
he is the person liable for paying the tax in
relation to the supply of such goods or
services or both;

Provided also that notwithstanding
anything contained herein above, where cement is received from an unregistered
person, the promoter shall pay tax on
supply of such cement at the applicable
rates on reverse charge basis and all the
provisions of the Integrated Goods and
Services Tax Act, 2017 (13 of 2017), shall
apply to him as if he is the person liable
for paying the tax in relation to such
supply of cement;

(Please refer to the illustrations in
annexure III)

Explanation. –

  1. The promoter shall maintain project
    wise account of inward supplies from
    registered and unregistered supplier and
    calculate tax payments on the shortfall at
    the end of the financial year and shall
    submit the same in the prescribed form
    electronically on the common portal by
    end of the quarter following the financial
    year. The tax liability on the shortfall of
    inward supplies from unregistered person
    so determined shall be added to his output
    tax liability in the month not later than the
    month of June following the end of the
    financial year.
  2. Notwithstanding anything contained in
    Explanation 1 above, tax on cement
    received from unregistered person shall be
    paid in the month in which cement is
    received.
  3. Input Tax Credit not availed shall be
    reported every month by reporting the
    same as ineligible credit in GSTR-3B
    [Row No. 4 (D)(2)].
(ia) Construction of residential apartments
other than affordable residential apartments by
a promoter in an RREP which commences on
or after 1
st April, 2019 or in an ongoing RREP
in respect of which the promoter has not
exercised option to pay integrated tax on
construction of apartments at the rates as
specified for item (ie) or (if) below, as the case
may be, in the manner prescribed therein,
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.
(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)		 7.5
(ib) Construction of commercial apartments
(shops, offices, godowns etc.) by a promoter in
an RREP which commences on or after 1
st
April, 2019 or in an ongoing RREP in respect
of which the promoter has not exercised option
to pay integrated tax on construction of
apartments at the rates as specified for item
(ie) or (if) below, as the case may be, in the
manner prescribed therein, 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.
(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)		 7.5
(ic) Construction of affordable residential apartments by a promoter in a Real Estate
Project (herein after referred to as REP)
other than RREP, which commences on or
after 1
st April, 2019 or in an ongoing REP
other than RREP in respect of which the
promoter has not exercised option to pay
integrated tax on construction of apartments at
the rates as specified for item (ie) or (if) below,
as the case may be, in the manner prescribed
therein, 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.
(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)		 1.5
(id) Construction of residential apartments
other than affordable residential apartments by
a promoter in a REP other than a RREP
which commences on or after 1
st April, 2019 or
in an ongoing REP other than RREP in respect
of which the promoter has not exercised option
to pay integrated tax on construction of
apartments at the rates as specified for item
(ie) or (if) below, as the case may be, in the
manner prescribed therein, 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.
(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)		 7.5

(ie) Construction of an apartment in an
ongoing project under any of the schemes
specified in sub-item (b), sub-item (c), subitem
(d), sub-item (da) and sub-item (db) of
item (iv); sub-item (b), sub-item (c), sub-item
(d) and sub-item (da) of item (v); and sub-item
(c) of item (vi), against serial number 3 of the
Table, in respect of which the promoter has exercised option to pay integrated tax on
construction of apartments at the rates as
specified for this item.

(Provisions of paragraph 2 of this notification
shall apply for valuation of this service)

 12

Provided that in case of ongoing project,
the registered person shall exercise one
time option in the Form at Annexure IV to
pay integrated tax on construction of
apartments in a project at the rates as
specified for item (ie) or (if), as the case
may be, by the 10th of May, 2019;

Provided also that where the option is not exercised in Form at annexure IV by the
10th of May, 2019, option to pay tax at the
rates as applicable to item (i) or (ia) or (ib)
or (ic) or (id) above, as the case may be,
shall be deemed to have been exercised;

Provided also that invoices for supply of
the service can be issued during the period
from 1st April 2019 to 10th May 2019
before exercising the option, but such
invoices shall be in accordance with the
option to be exercised.”;

(if) Construction of a complex, building, civil
structure or a part thereof, including,-

  1. commercial apartments (shops, offices,
    godowns etc.) by a promoter in a REP
    other than RREP    ,
  2. residential apartments in an ongoing
    project, other than affordable residential
    apartments, in respect of which the
    promoter has exercised option to pay
    integrated tax on construction of
    apartments at the rates as specified for this
    item in the manner prescribed herein,

but excluding supply by way of services
specified at items (i), (ia), (ib), (ic), (id) and
(ie) above 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.

Explanation. –For the removal of doubt, it is
hereby clarified that, supply by way of services
specified at items (i), (ia), (ib), (ic), (id) and
(ie) in column (3) shall attract integrated tax
prescribed against them in column (4) subject
to conditions specified against them in column
(5) and shall not be levied at the rate as
specified under this entry.

(Provisions of paragraph 2 of this notification
shall apply for valuation of this service

 18

(b) against serial number 3, –

  • a. item (ii) and the entries relating thereto in columns (3), (4) and (5) shall be
    omitted;

  • b. in item (iv) in column (3), –

(1) after the figures “2017”, the words, brackets, figures and letters “other than
that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above” shall be
inserted;

  • c. in item (v) in column (3), –

(1) after the figures “2017”, the words, brackets, figures and letters “other than
that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above” shall be
inserted;

  • d. after item (v) and entries relating thereto in column (3), (4) and (5), the following
    items and entries shall be inserted, namely, –
(3) (4) (5)
(va) Composite supply of works contract as
defined in clause (119) of section 2 of the Union
Territory Goods and Services Tax Act, 2017,
other than that covered by items (i), (ia), (ib), (ic),
(id), (ie) and (if) above, supplied by way of
construction, erection, commissioning,
installation, completion, fitting out, repair,
maintenance, renovation, or alteration of
affordable residential apartments covered by subclause
(a) of clause (xvi) of paragraph 4 below, in
a project which commences on or after 1
st April,
2019, or in an ongoing project in respect of which
the promoter has not exercised option to pay
Union Territory tax on construction of apartments
at the rates as specified for item (ie) or (if), as the
case may be, in the manner prescribed therein,		 6

Provided that carpet
area of the affordable
residential apartments,
as specified in the
entry in column (3)
relating to this item, is
not less than 50 per
cent. of the total
carpet area of all the
apartments in the
project;

Provided also that for
the purpose of
determining whether
the apartments at the
time of supply of the
service are affordable
residential apartments
covered by subclause
(a) of clause
(xvi) of paragraph 4
below or not, value of
the apartments shall
be the value of similar
apartments booked
nearest to the date of
signing of the contract
for supply of the
service specified in the entry in column
(3) relating to this
item
;

Provided also that in
case it finally turns
out that the carpet area
of the affordable
residential apartments
booked or sold before
or after completion,
for which gross
amount actually
charged was forty five
lakhs rupees or less
and the actual carpet
area was within the
limits prescribed in
sub
– clause (a) of
clause (xv
i) of
paragraph 4 below,
was less than 50 per
cent. of the total
carpet area of all the
apartments in the
project, the recipient
of the service, that is,
the promoter shall be
liable to pay such
amount of tax on
reverse charge basis
as is equal to the
difference between the
tax payable on the
service at the
applicable rate but for
the rate prescribed
herein and the tax
actually paid at the
rate prescribed
herein”;

  • e. in item (vi) in column (3), after the figures “2017”, the words, brackets, and
    figures “other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if)
    above” shall be inserted’;

  • f. in item (xii) in column (3), for the entry, the following entry shall be substituted,
    namely: –

“(xii) Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv),
(v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above.

Explanation. – For the removal of doubt, it is hereby clarified that, supply by
way of services specified at items (i), (ia), (ib), (ic), (id), (ie) and (if) in column
(3) shall attract integrated tax prescribed against them in column (4) subject to
conditions specified against them in column (5) and shall not be levied at the
rate as specified under this entry.”;

(c) against serial number 16,in item (ii) in column (3), for the word, brackets and letters
“sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of item (iv);
sub-item (b), sub-item (c), sub-item(d) and sub-item (da)of item (v); and sub-item (c)
of item (vi)”, the word, brackets figures and letters “ (i) (ia), (ib), (ic), (id), (ie) and
(if)” shall be substituted;

(d) after serial number 38 in column (1) and the entries relating thereto in column (2),
(3), (4) and (5) the following serial number and entries shall be inserted, namely: –

(1) (2) (3) (4) (5)
“39. Chapter 99

Supply of services other than services by
way of grant of development rights, long
term lease of land (against upfront
payment in the form of premium, salami,
development charges etc.) or FSI
(including additional FSI) by an
unregistered person to a promoter for
construction of a project on which tax is
payable by the recipient of the services
under sub- section 4 of section 5 of the
Integrated Goods and Services Tax Act,
2017 (13 of 2017), as prescribed in
notification No. 07/2019- Integrated Tax
(Rate), dated 29th March, 2019, published
in Gazette of India vide G.S.R. No. _,
dated 29th March, 2019.

Explanation. –

This entry is to be taken to apply to all
services which satisfy the conditions
prescribed herein, even though they may
be covered by a more specific chapter,
section or heading elsewhere in this
notification.

 18 -”;
  • (iii) in paragraph 2,-

(a) for the words, brackets, letters and figures “sub-item (b), sub-item (c), sub-item (d),
sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d)
9
and sub-item (da) of item (v); and sub-item (c) of item (vi),” the word, brackets,
letters and figures “ (i) (ia), (ib), (ic), (id), (ie) and (if)” shall be substituted;

(b) in the Explanation, after the words “this paragraph” the words “and paragraph 2A
below” shall be inserted;

(iv) after paragraph 2, the following paragraph shall be inserted, namely,

“2A. Where a registered person transfers development right or FSI (including additional
FSI) to a promoter against consideration, wholly or partly, in the form of construction of
apartments, the value of construction service in respect of such apartments shall be deemed
to be equal to the Total Amount charged for similar apartments in the project from the
independent buyers, other than the person transferring the development right or FSI
(including additional FSI), nearest to the date on which such development right or FSI
(including additional FSI) is transferred to the promoter, less the value of transfer of land, if
any, as prescribed in paragraph 2 above.”

(v) in paragraph 5 relating to Explanation, after clause (xii), the following clauses shall be
inserted, namely: –

“(xiii) an apartment booked on or before the 31st March, 2019 shall mean an apartment
which meets all the following three conditions, namely- (a) part of supply of construction of
which has time of supply on or before the 31st March, 2019 and (b) at least one instalment
has been credited to the bank account of the registered person on or before the 31st March,
2019 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 31st March, 2019;

(xiv) the term “apartment” shall have the same meaning as assigned to it in clause (e) of
section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);

(xv) the term “project” shall mean a Real Estate Project or a Residential Real Estate Project;

(xvi) the term “affordable residential apartment” shall mean, –
(a) a residential apartment in a project which commences on or after 1
st April, 2019, or in
an ongoing project in respect of which the promoter has not exercised option in the
prescribed form to pay integrated tax on construction of apartments at the rates as
specified for item (ie) or (if) against serial number 3, as the case may be, having carpet
area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities
or towns other than metropolitan cities and for which the gross amount charged is not
more than forty five lakhs rupees.

For the purpose of this clause, –

  • (i) Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi,
    Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata
    and Mumbai (whole of MMR) with their respective geographical limits
    prescribed by an order issued by the Central or State Government in this regard;

  • (ii) Gross amount shall be the sum total of; –

    A. Consideration charged for the services specified at item (i) and (ic) in
    column (3) against sl. No. 3 in the Table;

B. Amount charged for the transfer of land or undivided share of land, as
the case may be including by way of lease or sub lease; and

C. Any other amount charged by the promoter from the buyer of the
apartment including preferential location charges, development
charges, parking charges, common facility charges etc.;
(b) an apartment being constructed in an ongoing project under any of the schemes
specified in sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of
item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and
sub-item (c) of item (vi), against serial number 3 of the Table above, in respect of
which the promoter has not exercised option to pay integrated tax on construction of
apartments at the rates as specified for item (ie) or (if) against serial number 3, as the
case may be.”

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

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

(xix) 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;

(xx) the term “ongoing project” shall mean a project which meets all the following
conditions, namely-

  • (a) commencement certificate in respect of the project, where required to be issued by
    the competent authority, has been issued on or before 31st March, 2019, and it is
    certified by any of the following that construction of the project has started on or
    before 31st March, 2019:-

    • (i) an architect registered with the Council of Architecture constituted under the
      Architects Act, 1972 (20 of 1972); or

  • (ii) a chartered engineer registered with the Institution of Engineers (India); or

  • (iii) a licensed surveyor of the respective local body of the city or town or village or
    development or planning authority.

  • (b) where commencement certificate in respect of the project, is not required to be issued
    by the competent authority, it is certified by any of the authorities specified in subclause
    (a) above that construction of the project has started on or before the 31st
    March, 2019;

  • (c) completion certificate has not been issued or first occupation of the project has not
    taken place on or before the 31st March, 2019;

  • (d) apartments being constructed under the project have been, partly or wholly, booked
    on or before the 31st March, 2019.

Explanation.- For the purpose of sub- clause (a) and (b) above , construction of a
project shall be considered to have started on or before the 31st March, 2019, if the
earthwork for site preparation for the project has been completed and excavation for
foundation has started on or before the 31st March, 2019.

(xxi) “commencement certificate” means the commencement certificate or the building
permit or the construction permit, by whatever name called issued by the competent
authority to allow or permit the promoter to begin development works on an immovable
property, as per the sanctioned plan;

(xxii) “development works” means the external development works and internal
development works on immovable property;

(xxiii) “external development works” includes roads and road systems landscaping, water
supply, seweage and drainage systems, electricity supply transformer, sub-station, solid
waste management and disposal or any other work which may have to be executed in the
periphery of, or outside, a project for its benefit, as may be provided under the local laws;

(xxiv) “internal development works” means roads, footpaths, water supply, sewers, drains,
parks, tree planting, street lighting, provision for community buildings and for treatment and
disposal of sewage and sullage water, solid waste management and disposal, water
conservation, energy management, fire protection and fire safety requirements, social
infrastructure such as educational health and other public amenities or any other work in a
project for its benefit, as per sanctioned plans;

(xxv) the term “competent authority” as mentioned in definition of “commencement
certificate” and “residential apartment”, means the local authority or any authority created
or established under any law for the time being in force by the Central Government or State
Government or Union Territory Government, which exercises authority over land under its
jurisdiction, and has powers to give permission for development of such immovable
property;

(xxvi) The term “carpet area” shall have the same meaning assigned to it in in clause (k) of
section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);

(xxvii) the term “Real Estate Regulatory Authority” shall mean the Authority established
under sub- section (1) of section 20 (1) of the Real Estate (Regulation and Development)
Act, 2016 (No. 16 of 2016) by the Central Government or State Government;

(xxviii) “project which commences on or after 1
st April, 2019” shall mean a project other
than an ongoing project;

(xxix) “Residential apartment” shall mean an apartment intended for residential use as
declared to the Real Estate Regulatory Authority or to competent authority;

(xxx) “Commercial apartment” shall mean an apartment other than a residential apartment;

(xxxi) “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.

Annexure I

Annexure II

Annexure III

Annexure IV

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