GST rate from 12% to 8% for PMAY and CLSS homes

Hi,

Please note that GST Council at its meeting held on 18.01.2018 had reduced applicable GST Rates on MIG-2 Category houses under CLSS category as applicable to you. The same was notified and published in the official gazette of India on 25.01.2018 by Ministry of Finance vide G.S.R. 69(E). dated 25.01.2018.

It came into effect from that date itself i.e. 25.01.2018.

The said notification was to amend the principal notification No. 8/2017 - Integrated Tax(Rate), dated 28.06.2017, vide number G.S.R. 683 (E), dated 28.06.2017 and was last amended by notification No. 48/2017-Integrated Tax (Rate), dated 14.11.2017 vide number G.S.R. 1407(E), dated 14.11.2017.

The link of the official notification available as Gazette of India is as below:

http://egazette.nic.in/WriteReadData/2018/182325.pdf

I hope the same suffices your query and request.

Feel free to seek any further clarification.

Also, please note that the press release you referred was only recommendation of GST council and did not change the law unless published in the Gazette of India. Notification only officially published by Gazette is valid.

Regards,

CA. Sunny Thakral

Hi

Please follow the below link for official notification

http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-01-2018-cgst-rate-english.pdf

Plz refer below mentioned Notification no. -

Notification No. 1/2018-Central Tax (Rate)

New Delhi, the 25thJanuary, 2018

G.S.R......(E).- In exercise of the powers conferred by sub-section (1) of section 9, subsection

(1) of section 11,sub-section (5) of section 15 and sub-section (1) of section 16 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.11/2017-

Central Tax (Rate), dated the 28thJune, 2017, published in the Gazette of India, Extraordinary,

Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28thJune, 2017,

namely:-

In the said notification,

(i) in the Table, -

(a) against serial number 3, in column (3), -

(A)in item (iv),-

(I) for sub-item (c), the following sub-item shall be substituted, namely: -

‘(c) a civil structure or any other original works pertaining to the “ln-situ

redevelopment of existing slums using land as a resource, under the Housing

for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

(II) after sub-item (d), the following sub-items shall be inserted, namely: -

‘(da) a civil structure or any other original works pertaining to the

“Economically Weaker Section (EWS) houses” constructed under the

Affordable Housing in partnership by State or Union territory or local authority

or urban development authority under the Housing for All (Urban) Mission/

Pradhan Mantri Awas Yojana (Urban);

2

(db) a civil structure or any other original works pertaining to the “houses

constructed or acquired under the Credit Linked Subsidy Scheme for

Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle

Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the

Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);’;

(III) after sub-item (f), the following sub-items shall be inserted, namely: -

“(g) a building owned by an entity registered under section 12AA of the

Income Tax Act, 1961 (43 of 1961), which is used for carrying out the

activities of providing, centralised cooking or distribution, for mid-day meals

under the mid-day meal scheme sponsored by the Central Government, State

Government, Union territory or local authorities.”;

(B) in item (v),

(I) in sub-item (a), for the word “excluding”, the word “including” shall be

substituted;

(II) after sub-item (d), the following sub-item shall be inserted, namely: -

“(da) low-cost houses up to a carpet area of 60 square metres per house in an

affordable housing project which has been given infrastructure status vide

notification of Government of India, in Ministry of Finance, Department of

Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017;”;

(C) for item (ix) and the entries relating thereto in columns (3), (4) and (5), the following

shall be substituted, namely: -

(3) (4) (5)

“(ix) Composite supply of works

contract as defined in clause (119) of

section 2 of the Central Goods and

Services Tax Act, 2017 provided by a

sub-contractor to the main contractor

providing services specified in item

(iii) or item (vi) above to the Central

Government, State Government,

Union territory, a local authority, a

Governmental Authority or a

Government Entity.

6

Provided that where the services are

supplied to a Government Entity,

they should have been procured by

the said entity in relation to a work

entrusted to it by the Central

Government, State Government,

Union territory or local authority

Also while calculating price of house the cost of land to the extent one third has to be deducted which means effective rate will be 8% provided that house is under construction. Tell to your builder about deduction of cost of land to the extent of one third from cost of flat.

Yes, you can certainly do that.

Hi Rahul,

The proposal for rate reduction was made under this press release for which you shared the link. It will not be effective unless an until there is a notification rolled out by the department.

As on date, there is no notification rolled out by the government in this respect. As such the rate will continue to remain 18%.

Thanks

Damini

Yes, definitely.

You are eligible for that benefit and the builder is under an obligation to pass on that benefit to you due to anti profiteering clause in the GST laws.

He has to redraft the cost sheet. In case he doesn't, you can take appropriate action against him.

Regards,

CA Sunny Thakral

yes you can but tell him to revise his cost sheet, his CA knows it very well, actually rate is 12% but cost of land has to deduct from cost of flat to the extent of one third and thus 3% will be reduction in GST and thus effective rate will be 8% and not 12%, your builder knows this provision very well and also his CA.

Yes. You are right. Builder should charge 12% GST on 2/3rd value of consideration (Since 1/3rd value is deemed to be value of land which is not liable to GST). So, it works out to net 8% GST

Link for the official notification

http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-01-2018-cgst-rate-english.pdf

Actually this matter is now becoming critical, believing him is like gambling, i think you should take proper advice of advocate for entering sale deed or agreement for sale. Mentioned this matter in sale for agreement or sale deed, as far as CA i have already given advice regarding gst but further advice should be taken from advocate. costing part is with him and he will hardly share this information with you. i think you should take in written what ever he said in agreement.

Hi,

If the builder does not allow you to take benefit of the reduced GST Rates or does not pass on the benefit of the same to you, the builder is liable under anti-profiteering clauses of the GST Laws. Govt. has already set-up National Anti-Profiteering Authority for the same. However, you will first have to approach your local area GST commissioner for the same, who will guide you to the state screening committee under anti-profiteering laws.

After this, you will have to file application in APAF-1 to the designated state screening committee. The link for the said form is:

http://www.cbec.gov.in/resources//htdocs-cbec/gst/format_%20for_filing_anti-profiteering_application_new.pdf

By filling in the required details and filing the same with the designated official, you can start taking action against the errant builder.

If found guilty, the concerned authority may order for:

a) Reduction in prices as per the GST benefits

b) Impose penalty on the errant builder

c) Also, may cancel the GST Registration of the builder

You should take the appropriate action, but first try to convince the builder himself. Tell him that there is no provision for end consumers to take benefit of input tax credits under the GST laws since you are not even required to get any registration under the same.

I hope the above is helpful to you.

Regards

Complain with anti-profiteering committee

You can complain to Anti-Profiteering Authority constituted under CGST Act or under your State's GST Act.

You can complain at Anti profiteering committee.

Hi,

Please note that for houses under PMAY/ CLSS, builders also have to get suitable registrations with National Housing Bank (or approved banks by NHB) in order to be eligible to be able to sell houses under PMAY/ CLSS.

Hence, if builder has got such registration, you don't need to go to any bank but builder himself shall provide you such relief because builder has been registered under such scheme and will charge you the GST on revised rates of 8% rather than 12%.

In case builder is not eligible under PMAY/ CLSS as per the requirements, you will not get any benefit neither from bank nor any refund from GST department.

As such if builder is eligible and has got required registrations, he will definitely have to provide you benefits.

Regards,

Dear Sir,

Overall if we see after availing the benefit of Input tax credit the effective rate of GST on construction of house will be minimum. You can submit copy of loan application documents to the builder as an proof that you fall under the category of MIG-2 and eligible for the GST rate of 8%. When bank has accepted your application and sanctioned the loan then there is no room left for doubt.

Tell builder that bank has passed the subsidy on my interest component but for the cost of property it is your liability otherwise you can approach the anti-profiteering committee with all supporting documents.

Thanks

CA Vivek Arora

7060029944

Since bank has accepted that you fall under the category of MIG2, it becomes a proof to show it to the builder. He has to pass on the benefit to ultimate consumer.

If he is not doing so, you can contact anti profiteering cell of GST. Take help of any professional.

Hi,

Sorry not aware of the actual process as to whom should we approach first.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Hello,

Normally, the builders itself have a tie up with the banks for such schemes. So your builder has to pass on that benefit to you and take care of the formalities.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Dear Sir,

Either forget 4% or compliant to anti-profiteering committee.

Thanks

Hi,

The process explained by you in the bank is related for subsidy only on interest. It has nothing to do with the GST amount.

For getting benefit under GST, the project of the builder should be approved under CLSS/ MIG/ EWS Scheme under PMAY of the Govt. If the builder has that registration, then the builder is required to charge GST under reduced rates only and not on higher rates. The same reduced GST shall be disclosed by the builder in his GST Returns to claim benefit of payments as well as input tax credit.

The notification mentioned by you of 07.02.2018 mentions the same point as discussed above. Builders are required to pass on the full benefit of reduced GST rates to the buyers of the houses under PMAY.

Regards,

That;s good. Wait till approval from NHB and get the refund from builder for GST paid @4% till approval. Ask the bank to give in writing for builder.

This press release is not binding on builders. As a good practice, builder should follow this but you cant force them.

Further, NHB approval is necessary for getting subsidy as well as benefit of 4% GST.

Hi

NHB approval would be required to claim such benefit.

The press release is not binding on the builder.

.

Hi,

I have same reply. NHB has nothing to do with the reduction of GST rate. It is the project of the builder that required approval as per PMAY for EWS/ CLSS/ MIG Category to get benefit of reduced GST Rates.

After all the builder will also get benefit of reduced GST Rates.

Regards,

Hello,

Did you convey this to the builder ?