Background:
The Ministry of Finance issued Press Release dated May 28, 2021 pertaining to decisions taken in 43rd GST Council meeting wherein following recommendations were made to make appropriate changes in the relevant notification for an explicit provision to make it clear that land owner promoters could utilize credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
Following notification has been issued in this regard:
Notification:
The CBIC vide Notification No. 03/2021- Central Tax (Rate) dated June 02, 2021 to amend Notification No. 6/2019- Central Tax (Rate) dated March 29, 2019 which notified person liable to pay GST on development rights, FSI etc. as under:
- Substituted “in whose case the liability to”, the words “, who shall”
- Substituted “shall arise on the date of issuance of completion certificate for the project, where required, by the competent authority or on its first occupation, whichever is earlier”, the words “in a tax period not later than the tax period in which the date of issuance of the completion certificate for the project, where required, by the competent authority, or the date of its first occupation, whichever is earlier, falls”
Relevant portion of the Notification No. 6/2019- Central Tax (Rate) dated March 29, 2019 now reads as under:
“…following classes of registered persons, namely:-
(i) a promoter who receives development rights or Floor Space Index (FSI) (including additional FSI) on or after 1st April, 2019 for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash;
(ii) a promoter, who receives long term lease of land on or after 1st April, 2019 for construction of residential apartments in a project against consideration payable or paid by him, in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name),
as the registered persons who shall pay central tax on, –
(a) the consideration paid by him in the form of construction service of commercial or residential apartments in the project, for supply of development rights or FSI (including additional FSI);
(b) the monetary consideration paid by him, for supply of development rights or FSI (including additional FSI) relatable to construction of residential apartments in project;
(c) the upfront amount (called as premium, salami, cost, price, development charges or by any other name) paid by him for long term lease of land relatable to construction of residential apartments in the project; and
(d) the supply of construction service by him against consideration in the form of development rights or FSI (including additional FSI), –
in a tax period not later than the tax period in which the date of issuance of the completion certificate for the project, where required, by the competent authority, or the date of its first occupation, whichever is earlier, falls”
This notification shall come into force with effect from June 2, 2021.
The CGST (Rate) Notification can be accessed at: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-03-2021-2020-cgst-rate.pdf
Similar Notification has been passed under IGST (Rate): https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-03-2021-igst-rate-english.pdf
Similar Notification has been passed under UTGST (Rate): https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-03-2021-utgst-rate.pdf