Affordable Residential Apartments: AAR is subject to a GST of 1.5%
The Kerala Authority for Advance Ruling (AAR) has recently held that the residential apartments under the category “affordable residential apartments”, having carpet area not exceeding 60 square metres in metropolitan cities or 90 square metres in cities, are taxable at 1.5% Goods and Services Tax (GST) as 0.75% Central Goods and Services Tax (CGST) along with 0.75% State Goods and Services Tax (SGST).
The Applicant, Crescent Builders approached the authority to clarify whether “Affordable Residential Apartment” in a Residential Real Estate Project when the project consists of both “Affordable Residential Apartments” as well as apartments other than Affordable Residential Apartments are taxable at 0.75% State and 0.75% Central GST.
The Authority, upon perusal of the provisions of the CGST and SGST Acts, rules and notifications, observed that All the 50 units in the apartment complex are having a carpet area of less than 60 square metres and the total sale consideration including all charges in respect of 30 residential apartments will be above 45 lakhs and in respect of 20 residential apartments, the total sale consideration will be below 45 lakhs. Thus, the 20 residential units in the project would qualify as “Affordable Residential Apartments”.
The Authority comprising Abraham Renn S and Sreeparvathy S L observed that “The Item Nos (i), (ii) of Sl. No.3 of Notification No.11/2017 CT (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 CT (Rate) dated 29.03.2019” covers the issue of the extent of tax liability of the applicants in respect of the services of construction of affordable residential apartments and residential apartments other than affordable residential apartments respectively.
Thus, it was ruled that the applicant is liable to pay GST at the rate of 1.5% GST and 7.5% GST for affordable residential apartments and apartments other than affordable residential apartments in the same project respectively.