30 May 2019Posted By: Mudit Handa

6 Facts that you must know about GST on Real Estate Projects

The government has recently taken a significant step by revising the rates of GST on the housing sector, with effect from 1st April 2019.


It is indeed a noteworthy issue for the realtors who have GST registration as well as the buyers who have invested huge sums in the housing projects. Very importantly, the developers were given a one-time option to select either of the previous and revised GST rates on real estate projects in a specified time frame. Now, 2 separate GST rates are applicable on real estate projects, one with ITC benefit and the other without ITC.


Here are some vital facts that you must not overlook while investing in a Housing Project.


1. What is a Residential Real Estate Project?

Residential Real Estate Project, abbreviated as RREP refers to a Real Estate Project that has the carpet area of the housing apartments up to 15% of the total carpet area of the entire building in that project.


2. What are the criteria for a new housing project?

As per the new mandate, all projects beginning prior to April 1, 2019, but not having received any booking shall be termed as ‘new projects’.

These shall be subject to the revised GST rates, without the benefit of Input Tax Credit.


3. What is an on-going housing project?

As per the GST regulation, an on-going project refers to the one that satisfies the below criteria:

  1. Commencement certificate for that project has been granted on or before 31st March 2019. This Commencement certificate assures that the construction process has started. This means that excavation for the site preparation for the project has started and the foundation has been laid on or before 31st March 2019.

  2. Completion certificate has not been granted, or the occupation of first flat in the project has not yet been made on or before the 31st of March 2019.

  3. In case commencement certificate is not necessary, it must be authenticated by authorities specified above that the construction has begun on or before the 31st March 2019.

  4. Booking of the Apartment has been done on or before 31st March 2019.


4. Who issues the commencement certificate for housing project?

These are the authorized parties who issue the commencement certificate for a housing project:

  • Registered architect,
  • Chartered engineer or
  • Licensed surveyor.  


5. What are the criteria for issuing commencement certificate for housing project?

Construction of a project shall be considered to have been started on or before 31st March 2019, if the earthwork for site preparation for the project has been completed, and excavation for the foundation has started on or before the 31st March 2019.


6. How much value of goods & services a promoter has to buy from registered suppliers?

As per the new law, a promoter or builder has to purchase at least 80% of the total value of input services, from suppliers having GST registration.

To ascertain this threshold, the value of the following services is to be excluded-

  • Grant of development rights (TDR),
  • Long term lease of land,
  • Floor space index (FSI)
  • Electricity,
  • High-speed diesel, motor spirit & natural gas used in the construction.

If you require any sort of assistance related to GST registration, please feel free to contact our business advisor at 8881-069-069.

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