Hi, A person is registered under GST under service category: ARCHITECTS SERVICES, INTERIOR DECORATORS/ DESIGNER'S SERVICE & CONSTRUCTION SERVICES IN RESPECT OF COMMERCIAL OR INDUSTRIAL BUILDINGS AND CIVIL STRUCTURES. He takes contracts of building houses & sometimes commercial properties, repair work in apartments, building rooms, bathrooms, interior decoration, etc - he has more than one projects going on at the same point of time. He takes advances from his clients at the start of the work & during work in progress, but bills after completion of the project. Question: 1. Can he avail Input tax credit? 2. Some of the materials that he buys for the projects attract 28% GST but at the time of billing, he charges 18% GST on all materials and on his service charges. Is that correct? 3. Is it required for him to show the advances (in gstr1) that he received and does he need to maintain a separate bill book for advances? And does he need to give a receipt to his clients for advances received? 4. Are there separate GST slabs for residential and commercial buildings? Does he need to charge different rates for both? 5. If he builds a residential property - what'll be the GST rate? If he provides any construction or repair service to a commercial property, what'll be the GST rate?
The nature is services provided by you is works contract services under which services plays a dominant role.
1. Yes ITC is available to you on inputs and input services.
2. Rate would be 18%.
3. For advances, please issue a receipt having complete details on the receipt such as GSTIN, POS, rate, description etc. Yes you need to pay GST on the advances and show in GSTR-1. Issue invoice after the completion of services.
4. & 5. As you are providing services, GST rate would be 18% in all cases.
Yes input tax credit of all such material is available to those who are involved in such business.
Yes thats correct and this would be covered under inverted duty structure.
Yes in case of services receipt of advance needs to be reported under GSTR 1 and GST needs to be paid on same.
If he is a builder and constructing residential houses then in that case GST would be 5% in case of residential house and 1% in case of affordable house.
However in case of undertaking works contract i.e. just providing the service of constructing GST rate would be 18%.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hello,
1. Yes, ITC would be available.
2. Yes, the rate would be 18% on al material and service charges under works contract.
3. Yes, GST is required to be paid on the advances through GSTR-3B and they would be reported in the GSTR-1 for the relevant period. A receipt voucher would be issued for the advances received.
4. For Work Contracts, 18% would be the rate.
5. For the construction of residential apartments, it would be 5% and for affordable houses, it would be 1%, both without ITC.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
1.ITC is available because u r into business of construction business & the same will be held for sale purpose.
2. That is 2 different u can purchase at a high rate & can sale the final product at less rate. Rate will be 18% under works contract.
3.GST is required to be paid on the advances through GSTR-3B and need to be reported in the GSTR-1 as well.
4. As per gst act rate on work contract will be 18%
5. Builders can opt for the existing 12% tax rate for homes that are under construction as on 31 March, but will have to pass on the benefits of input tax credit to customers, or choose the new GST rate of 5%, effective 1 April.
The GST Council, however, made it clear that for new projects starting 1 April, the 5% and 1% GST rates would apply.
Please rate 5 & provide valuable feedback so that I can improve my answer in future.
Dear Sir,
Hope you are doing well !!
1. Yes, he can avail ITC.
2.Rate would be 18%.
3.Yes.
4.Rate would be 18%
5.18% would be applicable in all cases.
1. Yes
2. Yes, it's correct
3. Yes, it's required to mention advance in GSTR 1 and pay gst on it. He should give proper receipt for advance.
4. No. It's same for the both.
5. Gst rate will be 18%
