Background:-
A revised GST rate has been prescribed, w.e.f. April 01, 2019, on the supply of service by way of construction of the residential apartment. Under this, the construction of affordable residential apartments attract GST at the rate of 1% [without ITC] and other residential apartments attract GST at the rate of 5% [without ITC]. (These rates have been prescribed vide Notification no. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended by Notification no. 3/2019- Central Tax (Rate) dated 29.03.2019).
Further, one of the conditions prescribed vide said notification is that at least eighty percent. of the value of input and input services, [other than services by way of grant of development rights, long term lease of land or FSI, electricity, high-speed diesel, motor spirit, natural gas], used in supplying the construction service, shall be received by the promoter/developer from registered supplier only. In case of the shortfall from the said threshold of 80 per cent., the promoter/developer shall pay the tax on the value of input and input services comprising such shortfall in the manner as has been prescribed vide said notification. This tax shall be paid through a prescribed form electronically on the common portal by end of the quarter following the financial year. Accordingly, for FY 2019-20, tax on such shortfall is to be paid by June 30, 2020. In the above context, requests have been received seeking details of prescribed form on which the said tax amount has to be reported.
Instruction:-
The Ministry of Finance (“MOF”) vide Instruction No. 3/2/2020 – GST dated June 24, 2020, has decided that FORM GST DRC-03, as already prescribed, shall be used for making the payment of such tax by the promoter/developer i.e. the promoter or developer who is supplying construction of residential apartment etc, on the shortfall value of inward supplies from registered supplier at the end of the financial year. Accordingly, person required to pay tax in accordance with the said notification on the shortfall from the threshold requirement of procuring input and input services (below 80%) from the registered person shall use the form DRC-03 to pay the tax electronically on the common portal within the prescribed period.
The Instruction can be accessed at: https://www.cbic.gov.in/resources//htdocs-cbec/deptt_offcr/training/Instruction%20DRC%2003.pdf