12% GST on Works Contract Service received from Contractors in developing residential Housing Project: AAR [Read Order]

12% GST - Works Contract Service - Contractors - residential Housing Project - AAR - Taxscan

The West Bengal Authority of Advance Ruling (AAR) ruled that 12% of GST is applicable on works contract service received from contractors in developing residential housing projects.

The applicant, M/s Primarc Projects Pvt Ltd. is the promoter of residential real estate project, supplying construction service in developing a residential housing project named “Akriti” (RREP) in Burdwan.

The applicant submits that half of the total number of dwelling units being constructed measures less than 60 sqm of carpet area for each such unit. It is, therefore, an affordable housing project in terms of Notification No. 13/06/2009 INF dated 30/03/2017 of Department of Economic Affairs, Government of India. The works contract service provided for construction of the project is, therefore, taxable under Entry No. 3(v)(da) of the Rate Notification.

The applicant sought advance ruling on the issue whether Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017 (hereinafter the Rate Notification), as amended time to time, applies to the works contract service received from the contractors.

The  Entry No. 3(v)(da) of the Rate Notification says that low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March, 2017. The 12% GST is applicable.

The The two-member bench consisting of Susmita Dey and Parthasarthi Dey ruled that the works contract service for the construction of those dwelling units in the project named ‘Akriti’ that are affordable residential apartments in terms of clause 4(xvi) of Notification 11/2017 Central Tax (Rate) dated June 28, 2017, as amended time to time, are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in Entry No. 3(ie) or 3(if).

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