Payment of GST by real estate developer on  shortfall value of inward  supplies

Payment of GST by real estate developer supplying construction of residential apartment etc. on  shortfall value of inward supplies at end of financial year

Instruction No. 3/2/2020-GST

F. No. 354/32/2019-TRU
Government of India
Ministry of Finance
Department of Revenue
(Tax research Unit)
*****

Room No. 146G, North Block,
New Delhi, 24th June, 2020

To
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /Commissioners of Central Tax (All)
The Principal Director Generals / Director Generals (All)

Madam/Sir,

Subject: Payment of GST by real estate promoter/developer supplying construction of residential apartment  etc,on  the  shortfall value  of  inward  supplies  from registered supplier at the end of the financial year–reg.

A  revised  GST rate has  been  prescribed, w.e.f. the  1st April,  2019  on  the  supply  of service  by  way  of  construction  of  residential  apartment.  Under  this,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).

2. One of the condition prescribed vide said notification is that at least eighty per cent. of  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 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 the 30th June, 2020.

3. In the above context, requests have been received seeking details of prescribed form on which the said tax amount has to be reported.

4. The issue referred by the trade has been examined. It has been decided that FORM GST  DRC-03,  as already prescribed, shall  be  used  for  making  the payment of such tax by promoter/developer. Accordingly, person required to pay tax in accordance with the said notification on the shortfall  from  threshold  requirement of procuring input and input services  (below  80%)  from  registered  person  shall  use  the  form  DRC-03  to  pay  the  tax electronically on the common portal within the prescribed period.

5. It is requested that suitable instructions may be issued by the States/ field formations of CBIC to advise the trade accordingly.

Yours Faithfully,

Susanta Kr. Mishra
Technical Officer (TRU)
susanta.mishra87@gov.in

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