GST Council in the 34th meeting held on 19-3-2019 has decided on the modalities of implementation of GST rate of 1% in case of affordable houses and 5% on construction of houses other than affordable houses.

According to the press release, a one-time time-bound option will be provided to promoters to continue to pay GST at the old rate in respect of on-going projects. Tax at new rate will be payable from 1-4-2019 on new projects and the same will be subject to conditions like purchase of at least 80% of inputs and input services [other than capital goods, TDR/ JDA, FSI, long term lease (premiums))] from registered persons.

For ongoing projects, i.e., where both construction and booking have started before 1-4-2019, and is not completed by 31-3-2019, builders opting for new tax rates will transition input tax credit as per the method to be prescribed.

For real estate projects commencing after 1-4-2019, supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer will be exempt, if constructed flats are sold before issuance of completion certificate and GST is paid on them. If sale is after completion certificate, GST will be payable (as per prescribed value) on supply of TDR, FSI and long term lease (premium) of land by the builder under reverse charge mechanism.

The liability in such cases will arise on the date of issue of completion certificate. Notifications are yet to be issued to implement these changes.