Giving a breather to flat buyers, the Authority for Advance Rulings (AAR) has held that services such as preferential location charge will be eligible for concessional rate of goods and services tax (GST) for under-construction units, while no tax will be levied on those sold after completion. Some builders have been levying higher GST on preferential location charges (PLC) and other add-on services.
Prior to April 1, 2019, the GST for real estate was 12% (18% less one-third deduction for land). However, there was ambiguity on whether other charges such as PLC can be considered as composite supply and taxed at 12% or would be taxed at 18%.
Bengal Peerless Housing Development Company Limited, a joint venture of the West Bengal Housing Board and Peerless General Finance and Investment Company Limited, had approached AAR on whether such services would qualify as composite supply and can avail a reduced rate of 12% GST.
The authority has held that the applicant is providing service of construction of a dwelling unit in a residential complex with services relating to PLC, parking charges. It is a composite supply, construction service being the principal supply and hence, the entire value would be taxable at 12%, it held.