Bundling of facilities such as car parking, swimming pool, club and gym with residential apartments will be treated as composite construction service and attract lower rate of the goods and services tax (GST), according to an AAR ruling. Following the ruling, these services will be regarded as composite construction service and attract 12 or 5 per cent GST, as against 18 per cent levied of variety of other services. The verdict by the West Bengal bench of the Authority for Advance Ruling (AAR) clears the confusion with regard to the GST rate to be levied on additional services provided by realtors to homebuyers.
The ruling was given by the AAR on an application filed by Bengal Peerless Housing Development seeking clarification whether additional services would be treated as composite supply with construction service since they are usually bundled while booking a flat in an apartment complex. “The applicant (Bengal Peerless Housing Development) is providing service of construction of a dwelling unit in a residential complex, bundled with services relating to the preferential location of the unit and right to use car parking space and common areas and facilities. It is a composite supply, construction service being the principal supply,” the AAR said. It added that the “entire value of the composite supply is, therefore, to be treated, for the purpose of taxation, as supply of construction service”.