• GST on Affordable Housing Residential Apartment

I am a real estate developer currently doing a Residential Real Estate Project. 

The project has 163 Residential Apartment Units & Commercial shop for which the carpet areas are as below 

Commercial shop - 1125 SQM
Apartment type 1 - 113 Nos - 69.79 SQM Each - 7886.27SQM
Apartment type 2 - 50 Nos - 74.04 SQM Each - 3702 SQM

As the total commercial shops are less than 15% of total carpet area the project is a Residential Real estate project. 

The project is about about 5kms outside the municipal limits of Hyderabad and falls under Sangareddy District , Telangana (Non Metro)

Initially the sale price of each residential unit was about 40-43 Lakhs. Under this price bracket we have made about 25-30 Bookings and made agreements with them. 
As the total sale consideration was less than 45L and carpet area less than 90SQM we have charged customers with 1% GST as Affordable Housing residential apartment. 

Now due to market being good and increase in the construction material prices post covid the same flat is being sold at 50-55L. So, I have to now raise GST invoice as Housing residential apartment at 5% GST. 

I am selling 30 Units as affordable units and 133 units as non-affordable units in the same project for the similar units. Is there anything wrong in this practice. 

Also, i have been paying my sub-contractor who is doing WCT for me GST at the rate of 12% as the project was affordable housing project. But now since more than 50% of the flats are being sold as non-affordable housing the sub-contractor is now demanding payment of 18% GST for the entire project. Is it the correct practice?
Asked 3 years ago in GST

Dear Sir,

 

In reference to your exercise of charging both 1% and 5% as applicable on the said relevant apartments; the same is correct and may be continued.

In reference to your subcontractor previously charging 12% and now 18% is also correct.

However please note, that now since more than 50% of the flats are being sold as non-affordable apartments, in reference to the previous contractor billing of 12%, you would now need to discharge the shortfall of 6% (i.e. 18-12)  under RCM, latest by when the project would be completed.

 

Please advise in case of any further clarifications.

 

Thanks & Regards,

CA Aditya Dhanuka.

Aditya Dhanuka
CA, Kolkata
84 Answers
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