Concessional GST rate of 0.75% on construction applies to promoter & not to sub-contractor

Concessional GST rate of 0.75% on construction applies to promoter & not to sub-contractor

 

Brief Facts of the Case

The applicant furnishes the following facts relevant to the issue on which the advance ruling has been sought-

·       The applicant is engaged in the business of construction of residential apartments as a sub-contractor and has filed the instant application on the basis of the memorandum of understanding entered with M/s KG Foundation Private Limited (builder), Chennai for the proposed construction of a residential project at Perubakkam. The said project is related to the affordable housing scheme. It comprises 292 units under Pradhan Mantri Awas Yojna (PMAY) scheme.

 

·       The applicant claims the eligibility of concessional rate of CGST/KGST @ 0.75% for construction of an affordable residential apartment by a promoter in a Residential Real Estate Project (hereinafter referred as RREP) as per Si. No.3(i) of the Notification No. 11/2017-Central Tax (Rate), dated 28th June 2017 as amended by notification No.30/2018-Central Tax (Rate) dated 31st December, 2018 and further amended by Notification No.03/2019-Central Tax (Rate) dated 29th March, 2019, which commences on or after 1st April, 2019 and the promoter, therefore, would be charging CGST @ 0.75% (after deduction of 1/3 land cost on money consideration received).

 

·       The applicant contends that work contract services given to the main contractor, which qualifies for affordable house project (AHP) status, is a composite supply of work contract as per Section 2(119) of CGST/KGST Act 2017.

 

·       The applicant submitted that the benefit of concessional rate of tax is also available to any person who is supplying the ‘work contract’ services pertaining to low-cost housing in AHP. The applicants quoted the ruling of AAR Maharashtra in respect of ‘Shree Construction’ wherein it was held that benefit of 12% rate is also available to the sub-contractor who is supplying the services to the main contractor.

 

Ruling

·       Ruling given in above matter on the basis of that applicant admitted that he is not a promoter but a sub-contractor, and hence the benefit of said entry of the mentioned notification i.e. concessional rate of GST @ 0.75% for the proposed construction, is not applicable to the applicant.

[In the matter of Om Construction Company (GST AAAR Karnataka), Advance Ruling No. KAR ADRG 14/2022, Dated 30/04/2022]