GST on Construction services: AAR Explains:

GST on Construction services: AAR Explains The applicant, Om Prakash Mahawar, is a resident of Kolkata, West Bengal. As per the applicant, he is planning to take land on lease for 99 years from West Bengal Housing Infrastructure Development Corporation Ltd., which is a government company. The purpose of using this land is to build a hotel along with a shopping area and multiplex under the principal use- Assembly - Mercantile Retail, which includes permission to build some residential flats on the same land.

Also Read

Solar Power Plant Component Supply with Erection a Composite Supply for GST: AAR

Questions Asked by Applicant

The applicant made an application seeking an advance ruling for the following question: "Q1. Whether the applicant is liable for any kind of GST on its construction work for the prospective clients: a) When lump sum payment is charged; b) When periodic payment is charged for agreed term; Q2. If GST is liable, what shall be the HSN and GST rate and whether GST shall be on entire amount received or on amount after deduction as attributable to land portion i.e 1/3 of consideration by virtue of para 2 in rate Notification No. 11/2017 dated 28-6-2017, as amended? Q3. If it is accommodation service, whether applicant is eligible for exemption in clause 12 of Not. No.12/2017 dated 28-6-2017 as amended? Q4. Whether GST is payable for monthly/annual maintenance charges? If yes, HSN and GST rate?"

Also Read

ITAT Deletes Penalty Proceedings on Claim of Capital Gain Deductions u/s 54EC and 54F in Belated ITR

What did the Ruling Say?

As per the West Bengal Authority for Advance Ruling (WBAAR):

• GST is applicable on construction work for prospective clients, whether the payment is collected as a lump sum or through instalments.
• The SAC Code (Not HSN code) applicable to this supply is 9954 (Construction Services), and the GST rate on the supply shall be 18%. Deduction of 1/3rd of the total consideration for land is allowed to the applicant, and GST is applied on the remaining 2/3rd of the total supply.
• It is not considered an accommodation service (SAC: 9963), so no exemption applies under entry in sl. No. 12 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.
• GST is payable on monthly or annual maintenance charges according to the entry in sl. no. 33 of Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017. The SAC code and not the HSN code would be 9995, and the GST rate as 18%.