GST is applicable on “Affordable Residential Housing Project”

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The applicant is the promoter of residential real estate project, supplying construction service in developing a residential housing project named “Akriti” (RREP) in Burdwan. The applicant wants to know whether Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017, as amended time to time, applies to the works contract service received from the contractors.

It is held by AAR:

1. Flats having a carpet area of 60 sqm or less per unit in the RREP qualify as affordable residential apartments, provided the gross amount charged per unit does not exceed ₹45 lakh and the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3.

2. According to the Project Plan submitted at the time of the hearing, FAR for the entire project is 2.749 after deducting from the total built-up area the common areas like lift-lobby, stair area etc. FAR for the affordable residential apartments in the project should, therefore, be at least 1.375. The total plot size being 5627 sqm, the built-up area for affordable residential apartments should at least be 7734 sqm. The built-up area for the affordable residential apartments, as identified by the architect, under the RREP is 7885 sqm (the calculation sheet is attached).

The relevant FAR, therefore, comes out to be 1.401, which is 50.96% of the FAR for the project. The RREP, therefore, is an affordable housing project in terms of the AHP Notification.

Based on the above discussion, it is concluded that the works contract service for the construction of those dwelling units in the RREP that are affordable residential apartments in terms of clause 4(xvi) of the Rate Notification are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in (ie) or (if) of Entry No. 3.

Detailed case can be read here : ckfyrq1egdk7k08741r2p5fbz|Primarc Pr-2

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