Residential flats with parking, other facilities will attract lower GST - Rules West Bengal AAR

30 May,2019

Whereas concessional rate GST of 8% and 12 % was respectively applicable for affordable and other than an affordable residential unit in a residential complex which has been brought down to 1% and 5% without the benefit of input credit with effect from April 1st 2019. 

There was the controversy on the GST rate applicable for parking facility, preferential location charges(PLC) and other facilities provided as part of purchase of residential unit.  Under pre-April rate structure, many builders (adopting a conservative approach) were charging tax at the full rate of 18 percent on PLC, parking charges, transfer charges etc. instead of charging the lower rate of 12 percent as applicable to construction services (post abatement).

The West Bengal Authority for Advance Ruling (AAR-WB) has made it clear that construction of a dwelling unit in a residential complex, bundled with services relating to the preferential location of the unit and right to use car parking space and common areas and facilities, is a composite supply —construction service being the principal supply.

"Entire value of the composite supply is, therefore, to be treated, for the purpose of taxation, as supply of construction service," it said.

Though the rates have been lowered, but the practice of differential rate still continues.

As the AAR Ruling is binding only such individual case in which ruling has been given, and does not have precedent value, it has persuasive value. It means buyers can use the ruling of this matter in their petitions before the jurisdictional officer.

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