As per the GST (Goods and Services Tax) law, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer is a supply of service and hence, is liable to the goods and services tax (GST). However, no GST is meant to be paid on ready to move in or completed property as per the CGST Act, 2017. The GST is payable only on the under construction houses.
Following Are The Categories Of Houses For Accrual of GST
Property for which completion certificate has been issued: No GST is applicable on ready-to-move-in or completed property as per the CGST Act, 2017.
Under Construction property when part consideration has been paid to the builder: The buyers are liable to pay 4.5% service tax applicable on the invoices raised or consideration paid before the July 1, 2017. However, payment made by the buyer to the builder on or after July 1, 2017 against invoices issued on or after July 1, 2017 shall attract GST at the rate of 12%.
Under construction property when entire consideration paid to the builder before GST rollout: There is no GST payable on such property even if the construction is completed after July 1 2017. This transaction will attract service tax at the rate of 4.5% because as for the point of taxation rules, 2011, the transaction attracts service tax and not GST.
It is worth mentioning that the effective GST payable on purchase of under construction residence or commercial properties from a builder involving transfer of interest in land or individual to the buyer is 12% with full input tax credit. However, consideration which doesn’t constitute transfer in land or undivided share of land as part of consideration, such as construction services provided by a sub contractor to the builder, attracts GST at the standard rate of 18% with full input tax credit.