Ministry of Finance has on 7-5-2019 issued FAQs in respect of recent amendments made for the real estate sector which have come into force from 1st of April 2019.
FAQs released under F. No. 354/32/2019-TRU, dated 7-5-2019 clarify on some 41 questions relating to the new regime with reduced rate of GST.
A real estate project is an ongoing project unless all completion certificates, for every part of the project, are received for the entire project. Clarifying so, FAQ also states that where commencement certificate is issued prior to 1-4-2019 even for a part of project, it will fall under ongoing project, subject to conditions.
Similarly, it is stated that a project where construction has started prior to 31-3-2019 but apartment bookings have not started, would not be an ongoing project. Notably, ongoing project must opt for the new GST rates till 10-5-2019.
Liability on cancellation of bookings
Developer who paid GST at higher rate for apartment booked before 1-4-2019 is entitled to take adjustment of such tax against other liability upon cancellation of said booking on or after 1-4-2019, provided the entire amount received from buyer is refunded.
FAQ also states that in case apartment booked prior to 1-4-2019 is cancelled and rebooked at a new rate of 1%/5% or sold after completion certificate, ITC taken in respect of such apartment for supply of service till 31-3-2019 is to be reversed.