The Karnataka Authority of Advance Ruling (AAR) ruled that 18% GST is payable on Construction services for projects which are affordable housing projects and are given the infrastructure status.
The applicant, M/s Starworth Infrastructure and Construction Ltd. is engaged in the business of civil works contracts (construction of residential apartments). Further, they have entered into a contract agreement with Provident Housing Limited and Puravankara Limited (‘Developer) for the construction of residential apartment projects.
The applicant is the main contractor to M/s. Provident Housing Limited and M/s. Puravankara Limited (developer), who is developing the project which is having low-cost houses up to a carpet area of 60 square metres per unit and qualifies as 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 applicant has undertaken three projects, one from M/s Puravankara Limited in the name of “Provident Parksquare” and two projects from M/s Provident Housing limited in the name of “Provident Neora” & “Provident Capella”.
The applicant has sought an advance ruling in respect of whether the construction service provided by the Applicant to M/s. Provident Housing Limited under the project “Provident Neora & Provident Capella” & to M/s. Puravankara Limit under the project “Provident Parksquare,” qualifies for application of lower rate of CGST @ 6% and SGST @ 6% as provided in Sl.No.3-Item (V)-subitem (da) vide Notification No.11/2017-CT (Rate) dated June 28, 2017. The two-member bench of Dr M.P.Ravi Prasad and Mashood Ur Rehman Farooqui ruled that the construction service provided by the applicant to M/s. Provident Housing Limited under the projects “Provident Neora and Provident Capella” and to M/s. Puravankara Limited under the project “Provident Parksquare,” are liable to tax at the rate of 6% under the CGST and at the rate of 6% under the KGST Act as provided in SI.No.3-Item (v)-subitem (da) of Notification No.11/2017-CT (Rate) dated 28-06-2017, if the projects are affordable housing projects and are given the infrastructure status as per 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, else, the services will be liable to tax at the rate of 9% under the CGST Act and at the rate of 9% under KGST Act as provided in Sl.No.3-Item (xii) of Notification No. 11/2017-CT (Rate) dated June 28, 2017
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