What is the GST rate applicable on construction of residential house contract? If a building contains more than one residential house, is the applicable GST rate different? Also, if a contractor constructs a residential house using his own funds and later sells the constructed house, what is the applicable GST rate?

Reply—Rate of GST on construction of single Residential house— Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to a single Residential unit otherwise than as a part of a Residential complex is taxable @12% under S.No.3(v) of Noti. No.11/2017-CT (Rate) Dated: 28.06.2017.

Works contractor is eligible to claim ITC on purchase of input goods and services.

Rate of GST on construction of residential apartments— GST rates (1% and 5% without ITC) effective from 01-04-2019 are applicable to construction of Residential apartments in a project which commences on or after 01-04-2019.

1% GST — It is applicable on Affordable housing project. (having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than forty five lakhs rupees.)

5% GST — It is applicable on non affordable Residential housing project in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the project.

GST on sale of fully constructed Flats or house — construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, where the entire consideration has been received after issuance of Completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier shall be treated neither as supply of goods nor supply of services. Thus, sale of constructed flats is not considered as supply under GST, accordingly GST will not applicable.