6% More GST Is Payable If Construction Services Are Not Under Affordable Residential Apartments: Kerala AAR

The Kerala Authority Of Advance Ruling (AAR) has held that affordable residential apartments attract 1.5% GST. On the other hand, for residential apartments other than affordable ones, the rate of GST is 7.5%.

The bench of S.L. Sreeparvathy and Abraham Renn S. has observed that the term affordable residential apartment shall mean a residential apartment in a project that commences on or after April 1, 2019, or in an ongoing project in respect of which the promoter has not exercised the option in the prescribed form to pay central tax on the construction of apartments. The carpet area not exceeding 60 square metres in metropolitan cities or 90 square metres in cities or towns other than metropolitan cities and for which the gross amount charged is not more than Rs. 45 Lakhs.

The applicant is in the process of developing a Villa Project for prospective villa buyers and started construction activities in October 2020. They have entered into an agreement with the landlords for the purchase of the entire land area required for the project. The agreement so executed for the purchase of the land is registered with the office of the Sub-Registrar of Thrikkakara.

The applicant sought an advance ruling on the rate of GST applicable to the construction of affordable residential apartments and the sale of villas without the benefit of an input tax credit.

The AAR held that whether a villa falls under the category of affordable residential flats or other residential apartments determines the rate of GST that will apply to the applicant on its construction and sale.

Applicant’s Name: M/S. Palal Realty

Date: 20/02/23

Click Here To Read The Order