Project Start Date vs RERA registered Date

Project Start Date vs RERA registered Date

As per the new GST real estate norms, Construction of residential apartments in projects commencing on or after 01.04.2019 shall compulsorily attract new rate of GST @ 1% or 5% without ITC.
The builder is stating that the project RERA date was 2018. So, the builder opted out for 12%. But, in reality the builder started the construction only on July 2019. Please clarify whether the builder can opt out for 12% or it should be 5%?

Asked 5 years ago in GST

Hello,

The new rates are effective from 1st April 2019 and are applicable to the construction of residential apartments in a project which commences on or after 1st April 2019 as well as on on-going projects. In the case of the on-going projects, the promoter has an option to pay GST at the old rates.

A project which meets the following conditions shall be considered as an ongoing project.

(a) Commencement certificate for the project, where required, has been issued by the competent authority on or before 31st March 2019, and it is certified by a registered architect, chartered engineer or a licensed surveyor that construction of the project has started (i.e. earthwork for site preparation for the project has been completed and excavation for foundation has started) on or before 31st March 2019.

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

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

(d) Apartments of the project have been, partly or wholly, booked on or before 31st March 2019.

If in your case, the project is on-going as on 1st April 2019, as mentioned above, then the builder has the right to select old rates.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Hunny Badlani

CA, Madhya Pradesh

2608 Answers

16 Consultations

Talk to Hunny Badlani

Thanks Hunny for the detailed explanation. Commencement certificate for the project is unknown to me (I will check with the builder). May I know how you concluded this is an on going project? I can certainly rule out b, c, d but a is unknown. If the RERA approved dated is 2018, will the commencement certificate for the project issued on the same year and made this as an ongoing project?

The reason for the above question is, the builder has registered many towers (Buildings) under the same RERA and started the construction work on one of the tower just this July 2019 even though the RERA dated around somewhere 2018 and hasn't even started the ground for other towers mentioned in the RERA.

Asked 5 years ago

Since you mentioned that the builder has opted for old rates, I have given you the whole definition of On-going Projects as per the FAQs issued by the government in this regard. The builder has the option to select between old and new rates only in case of on-going projects and not in the case where the project has begun after 1st April 2019.

So you have to check with the builder if the said project is an on-going project or not.

Hunny Badlani

CA, Madhya Pradesh

2608 Answers

16 Consultations

Talk to Hunny Badlani

Dear Sir,

Hope you are doing well !!

For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC or opt for 5 per cent GST rate without ITC.

“Ongoing projects” means projects where construction and actual booking started before April 1, 2019, but which was not completed by March 31, 2019.

In your case, the new rate is apply only if builder had opted the option of new rates.

Otherwise, you will be liable to pay GST as per old rates.

Payal Chhajed

CA, Mumbai

5189 Answers

302 Consultations

Talk to Payal Chhajed

Thanks, this was an ongoing project as the ground work started before April 1st of 2019. Since the builder as opted out for 12% GST, can the builder apply the same to
Club House Charges
Development fee
Piped Gas and Solar Water Connection Charges
Infrastructure (STP, DG & other infra)
E.B, Water, Sewage Connection Charges? Which constitutes around 4 lakhs and attracting a GST of rupees around 45k

Asked 5 years ago

Yes, it will be applicable on all other charges collected.

Hunny Badlani

CA, Madhya Pradesh

2608 Answers

16 Consultations