1. IMPACT OF GST
ON REAL ESTATE SECTOR
By CA UMESH SHARMA

2. AGENDA What is GST. Current Tax V/s GST.
Builders and Developers –Business Process.
Buyers Perspective of Tax.
What will be impact on immovable property?
What will be impact of Land Value?
What may be the tax Rate?
What is the Impact of ITC?
What is the Place of Supply?
What will be the overall impact…
And many more FAQs…
Lets study in Simple and Fun loving way…
But why all this……….

3. Goods and Services are twin towers of GST, and we have to save our buildings for undue taxes....

4. or else… always take risk to earn ....

5. before and after incorrect tax planning risk? K.Raheja effect?

6. We have to get ready for Tax Planning and Surprises

7. Journey of LIFE
WHAT IS GST?

8. WHAT IS GST?

9. WHAT IS GST?

10. WHAT IS GST?

11. GST levy- Chargeability
Inter-State
Taxable person
Supply
IGST
Intra-
State
Services
Goods
CGST & SGST

12. GST FUNDAMENTALS – BRIEF INTRODUCTION
Source to Destination based Taxation System
(Dismantling fiscal barriers between States)
Charge of taxation – Multiple to Single Supply (even without Consideration and Inter branch Transfers)
Exemption less regime (Limited Exemptions)
Upfront Exemption to Refund Mechanism (Block funds in Taxes and then Claim)
Simple Indirect Tax Structure / Unified Tax Rates (Increase / Decrease in Tax burden)
Full Credit of Input Taxes / Removal of Cascading Effect of Taxes (No tax on Tax)
GSTN – Online Platform (Credits as reported by Vendors)

13. GST overview
GST could be a blessing in disguise for this sector which has been surviving the
adversities of the current indirect tax
complexities for a substantially long period
of time the last big hit being demonetization
Many have taken benefits…. Picture may be like this

15. Real Estate sector - overview
One of the most complex areas of the indirect tax levied by the Centre and the States is
Works contract and sale of property.
Construction and Real Estate sector
constitutes approximately 5% of the country
total GDP.
Growth of this sector has a direct nexus with the nations growth.
GDP growth to increase 2% due to GST?

16. Type of Players in Real Estate Sectors.
Builders. (Own Land)
Developers.( Others Land).
Works Contractors.( URD)
Labour Contractors. (URD)
Manufactures of Goods. (Cement Co, Tiles, etc.)
Suppliers of Goods.( Traders)
Suppliers of Goods from Outside Maharashtra.
Service Providers like Engineers, Architect,
Brokers, Advts, etc.
Financers and Bankers.
Leasing of Property.

17. Tax payers – positions…

18. Introduction of Taxes on real estate
Currently, such transactions are broken into three parts
The value of goods and materials
Value of services and
Value of land

19. Introduction The States apply VAT to the goods portion.
Current Tax Structure
The States apply VAT to the goods portion.
And the Centre taxes the services portion.
With no explicit tax on the transaction value of land.
The State also collects stamp duty and registration charges
for the registration of property.
Each authority taxes on aspects and valuation independent of the others.

20. Existing Law
Real estate transactions unfortunately are subject to manipulation and undervaluation in most parts of
India.
This area has seen extensive litigation and many
borderline , illogical reasoning has been accepted
by the tax authorities on the logic that some tax is
being collected. .

21. Existing Law
Presently builders/developers are paying following indirect taxes:
Service tax (ST) on services either to provider or on
reverse/ joint charge (sub contractors,manpower
supply etc);
Value added tax (VAT)/Central sales tax (CST) on steel,
cement, RMC, electrical sanitary, lifts, DG sets etc;
Excise duty on all items paid earlier to those on which VAT paid.

22. Sr. No.
Particulars
Present Taxation
GST (Expected) 1
Excise Duty
Imposed by Centre under separ ate Act; Taxable event: Manufac ture; Taxed up to manufacturing point
To be subsumed in CGST; Tax able event : Supply. To be tax ed up to retail level 2
Service Tax
Imposed by Centre under separ ate Act; Taxable event: Provision of Service
To be subsumed in CGST & S GST ; Taxable event : Supply of Service 3
Reverse Charge
Imposed on Services
Imposed on Inward Supply o f Services and Goods 4
Central Sales Tax
Imposed by Centre under CST A ct; Collection assigned to States; Taxable event : Movement of go ods from one State to another
To be subsumed in IGST ; Tax able event : Supply of Goods in inter-state.

23. Imposed by States; Taxable event : Sale within the State
Sr. No.
Particulars
Present Taxation
GST (Expected) 4
State VAT
Imposed by States; Taxable event : Sale within the State
To be subsumed in SGST; T axable event : Supply withi n State 5
Tax on Import in Indi a
Goods : Under Customs Du ty (comprises Basic Customs Duty, CVD & SAD) Services : Under Service Tax
Basic Customs Duty on Go ods : No Change. CVD & S AD on import of goods an d import of services : To b e subsumed in GST 6
Tax on Export of Goo ds & Services
Exempt/Zero-rated
- No Change - 7
Tax on inter-State Tra nsfer of Goods
Exempt against Form F
To be taxable as supply

24. Sr. N o.
Particulars
Present Taxation
GST (Expected) 8
Powers to levy Tax on Provisi on of Services
Center
Concurrent powers to Centre & State; 9
Tax on Import in India
Goods : Under Custom s Duty (comprises Basic Customs Duty, CVD & S AD) Services : Under S ervice Tax
Basic Customs Duty on Goods : No Change. CVD & SAD on i mport of goods and import of services : To be subsumed in GST 10
Tax on Export of Goods & Ser vices
Exempt/Zero-rated
- No Change - 11
Tax on inter-State Transfer of Goods
Exempt against Form F
To be taxable 12
Border Check Post (Way Bill)
In some states it is ther e.
Required

25. BUILDERS AND DEVELOPERS-PROCESS
LAND
Stamp Duty
Registration Fess
CONSTRUCTION
Works Contract Tax
VAT
Service Tax
Goods
Excise
Entry Tax
Services
Under Construction Sale
Service Tax 4.5% 1%

26. Buyers perspective of Tax on real estate
The Buyer do not avail credit of any taxes paid
on property i.e VAT, Service Tax, Stamp duty,
registration charges, as immovable property is
not a subject matter of tax once it is complete
On resale no tax is payable in current as well
as proposed scenario also.
Buyer generally buys under construction
property for cheaper rate and funds it
through bank loan for interest benefit.

27. What will be impact on immovable property?
The immovable property part is expected to be
excluded from the GST in terms of the decision of
the Supreme Court in case of
L&T (2014(303) ELT (003) in para 115.

28. Under Construction Contracts are only taxable Currently and GST also.

29. Supply Supply includes:
Clarification/Deemed Supply of Goods or Services u/s 3(2) -Schedule II
Physical supply u/s 3(1)
3(3) Neither supply of Goods/Services, ---Gov. related supplies- Schedule III
Without Consideration- Schedule I
3(4) Powers to notify 3
For consideration (Sale, transfer, rental, lease, WC, etc)
Importation of Services
With consideration
3(5) Composite/mixed Supplies
In the course or furtherance of business
Whether or not in the course or furtherance of business

30. SCHEDULE I MATTERS TO BE TREATED AS SUPPLY WITHOUT CONSIDERATION
1. Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.
2. Supply of goods or services between related persons, or between distinct persons as specified in section 10, when made in the course or furtherance of business.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
4. Importation of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

31. Few Examples- Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.
Assets transferred on succession of business,
conversion of entity (firm to LLP, company to LLP, firm to co mpany, LLP to company),
Amalgamation or merger,
Disposal of computer to charitable organization
Proprietor/ partners transferring goods for personal use
Can tax be levied even when no ITC was claimed in respect of such assets?

32. Few Examples- Supply of goods or services between related persons, or between distinct persons as specified in , when made in the course or furtherance of business.
Incidental usage of cars, telephones, office infrastructur e (business assets) by promoters, directors, etc.
Assets and Infrastructure of parent company used by as sociate/ sister concerns
What about ITC credit? Is it a double whammy?

33. Supply of goods or services between related persons, or between distinct persons as specified, when made in the course or furtherance of business.
Branch / Depot transfer
Services provided by Head Office/ corporate office to its Branch offi ces or regional offices
Goods sent to Job workers (other than job work u/s 43A of the Act)
Articles distributed in sales promotion schemes/ business gifts
Free samples distributed– physician samples in pharma industry
Articles supplied under schemes such as “buy one get one”, etc.
Accessories supplied free or at concessional rate along with machine
Gifts given to clients, business associates on social occasions such as marriage, Diwali, etc.
Donation in kind to charitable trust or NGO’s under CSR

34. Impact of “supply” in GST on Real estate?
All the supplies will be categorized as Supply of goods or Supply of Services or composite supplies (multiple supplies). Construction activities will be ‘works contract’ which is being categorized as ‘Services’.

36. Time of Supply in GST ?
Currently, many builders pay taxes on receipt basis (without complying with the point of taxation) in case of
service tax i.e. tax is paid only once the monies are
received from the customers.
In VAT also same routine is followed.
However, in the GST regime, tax needs to be paid
immediately on earliest of completion of service, raising of invoice or receipt of monies from customers.
This could have an impact and could cause blockage of
working capital

37. Time of supply of Service
11/1/2017
Time of supply of Service
Issue of Invoice by the supplier
Last date on which require to issue invoice with respect of supply
Receipt of payment by supplier in respect of supply
Earliest of
Receipt of payment Sec 3(1)(a) Supply made or agreed to be made
Issue Receipt Voucher
CA Gadia Manish R

38. Continuous Supply of service
Continuous Supply of service
Due date of payment is ascertainable
Yes
Before or on the due date on which the payment is liable to be made No
Before or at the time when the payment is received
Payment is linked to the completion of an event
Before or on the completion of event
Provided or agreed to be provided continuously or on recurrent basis, under a contract, for a period exceeding 3 months with periodic payment obligation and as may be notified
Continuous Supply of Service

39. Taxes Subsumed Under GST

40. What type of Taxes needs to be collected in GST?
All builders and developers in India
Will be collecting and paying
CGST (in place of Service Tax.)
SGST (in place of VAT.)
i.e. Central GST and State GST.
The place of supply of the service is the
location of the immovable property.
If site is at Navi Mumbai and office is at South Mumbai.
Immovable property is build up Navi Mumbai, hence It
will be the place of supply of services.
No IGST ?
IMPACT ON SERVICES PROVIDED BY ENGINEERS, ARTECHETC, WORKS CONTRACTORS, ETC.

41. CGST AND SGST will move together..

42. Levy of GST.- Pre-requisites
Authority under Constitutional to levy tax
Taxable
territory
Assesse/
Taxable
person
Taxable
event
Measure or value of tax base ?

44. Take care of provisions related to Goods and of Services as, both are merged in GST. Earlier separate acts were there….. Point of litigations?

45. Definition of Works Contract
Section 2(119) defines:
“works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;

46. Supply of services:
The following shall be treated as supply of services, namely:—
renting of immovable property;
(b) 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,
except 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.

47. “competent authority”:
“competent authority” means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:— (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972) ; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;

48. Composite supply and LEVY OF TAX
The following composite supplies shall be treated as a supply of services, namely:—
works contract as defined in clause (119) of section 2;
LEVY of TAX ON COMPOSITE SUPPLY:
a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
DEFINATION OF PRINCIPAL SUPPLY:
“principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;

49. Renting of Land & Building:
2. Land and Building
any lease, tenancy, easement, licence to occupy land is a supply of services;
(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

50. What are the expected Rate of Tax?
The GST council has agreed upon the 5 rate structure for levying tax on various goods and services i.e. 1% 5%
12%
18% and
28%
It is expected that the rate of GST that may be applicable on this
sector would be mostly 12% or 18%.
There may not be any further abatement/ composition on this rate.
Although this rate will be little on the higher side as compared to
current tax rates which is between 6% to 10%.
Although such high rate could have an adverse impact on this sector, however this impact could largely get reduced due to ease in credits availability. Thus net impact may be around 6 to 9%.

51. Hope there will be lesser burden of GST
Hope there will be lesser burden of GST? As compared to RERA on real estate sector.

52. What type of Input Tax Credits are available?
In GST regime all the duties/taxes (except stamp duty)
will get subsumed, therefore a builder should be able to
avail the input tax credit of all its procurement of goods/
services except for few restrictions placed in the
law.
Therefore, it would reduce the tax costs substantially in
the construction industry.
Under GST, it is expected that seamless credit of all taxes paid on procurement of goods/services will be allowed
so that net outflow of GST liability would be minimized.

53. Input Credit Adjustment
CGST - ITC
IGST
CGST
SGST - ITC
IGST
SGST
IGST- ITC
SGST
CGST
IGST

54.
When is ITC available
Possession of a tax invoice, etc., issued by a supplier registered under GST
Received the goods and/or services
The tax charged in respect of such supply has been actually paid to the credit of the appropriate Government,
Furnished the return under section
Time of Supply

55. ITC Partly used for Business
Partly used for other purpose
ITC used for Business shall only be eligible
Reversal of ITC
22/10/2016
ITC Partly used for Taxable Supply including Zero rated supply
Partly used for Non Taxable/ exempted Supply
ITC used for Taxable including Supply only be eligible
Use of business assets for personal purpose
Non-taxable : Interest Income, Dividend, Mutual Fund, Electricity
Exempted supplies include recipient liable pay under RCM

56. Credit not allowed motor vehicles and other conveyances
except when they are used for making the following taxable supplies, namely
further supply of such vehicles or conveyances
transportation of passengers/goods
imparting training on driving, flying, navigating such vehicles or conveyances

57. Credit not allowed Allowed only for outward supply of same category
food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery
Membership of
club, health and fitness centre
Allowed only if mandatory as per law
rent-a-cab, life insurance, health insurance
Travel benefits
travel benefits extended to employees on vacation such as leave or home travel concession

58. Credit not allowed
Works contract services when supplied for construction of immovable property,
other than plant and machinery,
except where it is an input service for further supply of works contract service;
goods or services received by a taxable person for construction of an immovable property on his own account, other than plant and machinery,
Construction includes to the extent of capitalization
‘Plant and Machinery’ means apparatus, equipment, machinery, pipelines, telecommunication tower fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural supports but excludes land, building or any other civil structures

59. Effect of RCM on URD?
Real estate sector utilises supplies from Un-organised sector. Many of Contractors, Small Suppliers are Un-registered. For e.g : Sand, Metal, Bricks, Labour, other services of Fittings, etc. Under GST: Builders/developers shall have to pay GST on such URD Suppliers. This will be a major impact on procurement planning. ITC will be available on such RCM payments.

60. Supply by a registered taxpayer to a registered taxpayer. (Taxable)
Normally, the supplier pays the tax on supply. In certain cases, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed which is why it is called reverse charge.
The buyer will have to pay GST on purchase from unregistered dealer.
On reading of this pat of section we can divide all supplies into four parts:
Supply by a registered taxpayer to a registered taxpayer. (Taxable)
Supply by a registered taxpayer to an unregistered taxpayer (Taxable)
Supply by an unregistered taxpayer to a registered taxpayer (Taxable)
Supply by an unregistered taxpayer to an unregistered taxpayer( No taxable)

61. IMPACT ON JOINT DEVELOPMENT AGREEMENT

62. Impact of GST on Joint Development Agreements:
GST will also be levied on the Joint development
agreements as Barter also amounts to ‘Supply’.
Comparative flat value may have to be taken for
calculating GST on such transactions.
There clear mechanism as to time of supply and
valuation has not been explicitly provided.
However, if it is not clarified then the current
disputes surrounding this area would continue in
the GST regime.
The need for treating JDA differently from
construction contracts may not be there.

63. Impact of GST on TDR Agreements:
TDR are two types;
One is compensatory nature by GOVT and used by owner.
Second is trading nature.
Taxation is under dispute in VAT and Service Tax both currently. As both are leaving tax on it.
Under GST it may be treated as Service and dispute may settle down.

64. What will be impact on value of land?
Herein the value of land and completed
construction as on the date buyer comes to
developer and gets into an agreement would be
out of the purview of GST.
Hopefully, the basis of deduction of the land value from the transaction liable to GST must be
unambiguous and clear.
Any ambiguity would only open the Pandora box of
disputes

65. What will be impact on value of land?
Since stamp duty is being paid, it is expected that the
land component would be allowed as deduction in the
valuation of real estate transactions in the GST.
However, the issues w.r.t the valuation of land to be
adopted and claimed as deduction could continue to be
a cause of dispute. Currently, even in the law, no clarity has been brought in as to the valuation of
the land.
However, it is expected that the same must be clarified
by way of issuing a notification during the GST regime.
Unclear provisions in this context could lead to large scale
disputes.

66. Impact of Occupancy Certificate in GST?

67. Impact on Requirement of completion certificate ?
Similar to provisions in service tax, GST is said to be levied if amount is received prior to completion certificate and there would be no GST if the entire amount is received after the completion certificate. Further, it is also stated that even if completion certificate is not received, GST may not be levied after the first occupancy of the premises. This would provide relief to builders who for various reasons were unable to obtain the completion certificate from the authorities and as a consequence were denied the exemption from service tax. Supply after first occupancy No GST, but No ITC of GST ? Reversal of earlier ITC and its impact.

68. Stock Transfer

69. Impact of GST on Stock Transfers?
Since, transfer of inputs/ capital equipment's from
one site to another is quite common in this sector.
Therefore, builders operating from multiple
locations in different states, then it would require
to pay GST on Stock/ Assets transferred from its
premises in one state to its premises in another
state.
Further, in case builders are having multiple
business verticals within the state and if a builder
opts to take separate registration for each such
business vertical, then GST needs to be paid for
stock transfers even when made within the same
Gst slide in stock transfer take diagram.

70. Would Multiple Registrations be required?
Concept of centralized registration for all the
projects will end and builders having a site in
multiple States would require to obtain
registration in each State from where the
construction activity/supplies are being
undertaken even though the project is for a very
small period or for a small value.
Although, this scenario is in existent in the
current law for the state taxes but the same will
now be done even for the central taxes.

71. What is impact on Returns?
Compliance burden will be very high in the
GST regime as one has to file 37 Returns in
one financial year for each registration.
Further, returns filed will be matched online
with the support of the IT infrastructure with
the returns of the vendors/ customers.
In case taxes are not paid by the vendors or if the returns are not filed by the vendors, then the credit of such taxes is denied to the
customers.
Therefore, timely payment of taxes, filing of
returns needs to be ensured in the GST
regime.

72. Transitional Credit issues?

73. Status of Current Exemptions ?
Many construction contracts which are exempted
in the current regime (especially the government
contracts) could be brought under the tax net in
the GST regime.
Therefore, if any long term contract is entered in
the current tax regime now but if GST is
implemented, then the same would be
taxable under the structures of the GST law.

74. Status of Current Exemptions ?
It is important to factor the GST impact while arriving at the price of the contract and the burden of the taxes must be
clearly reflected in the contract to avoid
any complications at a later date.
PMGAY, affordable housing ,etc. are exempt under current law of service tax may or may be continued in GST regime.
But not under MVAT, hence
Let’s see ………

75. IMPACT on-going contract

76. Impact on ongoing contracts
To analyse tax liability for all ongoing projects
in line with transition provision
Transaction structuring may be undertaken depending on impact of GST.
If GST has negative impact, consideration
may be made earlier even for supplies to
be undertaken post GST
Transition planning for timing of supplies,
advances and payment of tax
Representation to be filed to provide more
clarity on transition provision for ongoing
contracts

77. Transitional Credit issues ?
To transfer the existing credits in the
GST regime, condition has been kept
that such credit must have been
admissible in the GST regime.

78. ITC On Closing Stock
Today, a non-excise dealer can’t avail excise credit on closing stock value
On July 1, non-excise dealers can claim input tax credit on closing stock
Input Tax Credit
JUNE
JULY
Why you should start using technology from today? To set right your books to avail ITC, you need to start using technology from today! GST is going to be technology-centric implementation and technology will benefit you immensely going forward. You will not be able to clean your books overnight. You have to give time to yourself for transition. Its better to start using technology from today for benefit of tomorrow. (Speaker should emphases here to “Be on latest release of Tally.ERP 9 release 5.x”) 1 30
Closing Stock
Opening Stock
Businesses need to maintain purchase invoices of opening stock to claim input tax credit

79. Transition 1 2 Excise CGST Balance available as per last return filed
Allowed as ITC under GST
100% on duty/tax paid documents.
40% on payment of GST on other cases.
VAT
SGST

80. What Should I be doing Today?
To ensure that your business is able to seamlessly transition to GST, you would need to
Ensure that your Tax Returns = Books of Accounts during filing
Record the details of Tax Credit available on existing stocks
Discipline of meeting tax filing timelines
Need to maintain invoice level details going forward

81. Transitional Credit issues?
ITC on Inputs held in closing stock as on
Like Work in progress, Cement, Tiles, Steel, Hardware's, Capital Goods, etc.
Excise Duty Paid documents- 100% ITC.
No Documents- 40% of ITC on payment of Output tax on supply.
Exempted Items- No ITC in GST.
VAT Paid Items- ITC in GST.
Service Tax paid – ITC in GST.
Further used in Immovable property no ITC.
Conditions;
As per Returns only.
Stock Statement and Invoices.

82. Transitional Credit issues ?
Therefore, builders should be able to transfer the following credits to the GST regime:
Credit of Service Tax: The same must be properly
reflected in the last service tax returns and
documentation must be in place to establish the same.
Further, service tax credit pertaining to inputs in stock
can also be availed.
Excise Duty/ CVD: Since, currently builders are not
availing the credit of excise duty & CVD.Therefore,
builders need to ascertain the value of stock as on the
appointed day and based on the availability of the
invoice, credit can be availed.

83. Transitional Credit issues ?
Therefore, builders should be able to transfer the following credits to the GST regime:
VAT/ SAD: Similarly, if a builder is not availing the credit of VAT/SAD currently due to restriction in the state VAT law or due to being in
the composition scheme, then the credit can be availed based on the
ascertainment of stock as on appointed day.
However, if the credit of VAT is being currently availed then the same
needs to be properly reflected in the last VAT return to transfer such
credits to the GST regime.
Transitional credit on stocks also provides for
deemed credit at rates to be prescribed in the absence of duty/ tax
paying documents.

84. Transitional Credit issues ?
Therefore, builders should be able to transfer the following credits to the GST regime:
Credit of CST: The same cannot be availed based on the stock availability as on the appointed day.
Entry Tax: Credit of same can be availed subject to possession of appropriate documents for the
same in states where such set off is permissible

85. Possible requirement of contract restructuring
restructuring Place of provision for
services in relation to immovable
property would be location of the
immovable property.
There may be possible issues where a
single contract is entered into for
provision of services related to
immovable properties across two or
more States..

86. Possible requirement of contract restructuring
For example, in case of facility management services
outsourced to vendors, typically, a single contract may be entered into with the vendor, for which consolidated
invoices may be raised at one location.
Under GST, since
immovable property may be located in more than one
State, the place of supply would be each such State
where the immovable property is located, and hence,
there may be a requirement for the vendor to raise
separate invoices (for which separate contracts may also be required)

87. What are the Anti Profiteering Measures ?
Since a builder will be able to take the credit of goods lying in stock,
the tax cost would decrease.
This additional benefit accruing to the builders is expected to be
passed on to the end consumer by way of reduction in prices etc.
A separate authority will be formed in the GST regime to monitor the
Non-compliance of the anti-profiteering matters which could have an
adverse impact on the entire construction industry whose pricing is more market dependent than other factors.
Therefore, it is imperative for the builders to establish passing of the GST
benefit to its consumers.
In these times of falling prices this may not be challenge though.

88. Classification issues in GST ?
It seems that certain disputes in classification may arise in
the GST regime if a separate rate of tax is maintained for
the construction and other additional services provided by
the builders such as floor rise premium, car parking etc.
Based on the terms of the contract and the nature of the
supply, it needs to be determined whether it is a ‘composite
supply’ or a ‘mixed supply’ and accordingly rate of tax for
the additional services needs to be determined.
Therefore, if the construction agreements is not in line with the naturally bundled understanding then any differential
rate if applicable could be a cause of concern.

89. Valuation complexities in GST ?
Valuation of the services would be at the
transaction value.
However, valuation with the related parties/
between the group companies needs to be
properly dealt with and must be kept at
the arms length price to avoid unnecessary
departmental intrusion.

90. CERTAIN IMPORTANT THINGS YOU NEED TO KNOW

91. E-WAY BILL

92. E-WAY BILL
The Central Board of Excise and Customs (CBEC) has issued draft rules on Electronic Way (e-way) bill
That require registered entities to furnish, in a prescribed format, GST-Network (GSTN) website information relating to any goods worth more than Rs 50,000
Goods they intend to move within a state or outside. 

93. GSTN will generate e-way bills that will be valid for 1-15 days, depending on distance to be travelled - one day being for 100 kilometres and 15 days for more than 1,000 km transit
Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made available to the supplier, the recipient and the transporter on the common portal
The person in-charge of conveyance will be required to carry the invoice or bill of supply or delivery challan, and a copy of the e-way bill or the e-way bill number, either physically or mapped to a Radio Frequency Identification Device (RFID) embedded on to the conveyance

94. DELAYED PAYMENT -INTEREST
Collection of interest on delayed payment is taxable in GST.

95. TAX INVOICE

96. INVOICE SHALL CONTAIN-
(a) name, address and GSTIN of the supplier; (b) a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “- “ and ”/” respectively, and any combination thereof, unique for a financial year; (c) date of its issue; (d) name, address and GSTIN or UIN, if registered, of the recipient; (e) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered and where the value of taxable supply is fifty thousand rupees or more; (f) HSN code of goods or Accounting Code of services; (g) description of goods or services;

97. INVOICE SHALL CONTAIN-
(h) quantity in case of goods and unit or Unique Quantity Code thereof;
(i) total value of supply of goods or services or both;
(j) taxable value of supply of goods or services or both taking into account discount or abatement, if any;
(k) rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(l) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess);
(m) place of supply along with the name of State, in case of a supply in the course of inter- State trade or commerce;
(n) address of delivery where the same is different from the place of supply;
(o) whether the tax is payable on reverse charge basis; and
(p) signature or digital signature of the supplier or his

98. GST is Technology-centric Implementation
Let us consider 2 aspects of the law for illustration –
Seller needs to pay taxes before buyer can take input credit
Input credit is available for direct and indirect purchases
GST
Story line:
Quote the law sentence
For this to be implemented, you need invoice level details.
3. Maintaining details at the invoice level rigorously is cannot be done manually. 4. Therefore ‘usage of technology’ is not nice-to-have, but MUST HAVE to implement the law. Therefore GST is technology-centric implementation.
To enforce these laws, invoice level details are a MUST
To implement this effectively, technology is a MUST
First time ever in India, technology-centric compliance will be implemented

99. Impact of GST – Why compliance is important
B2B
Customer Relationship
B2B
Emotional Relationship
Compliance Relationship
Buyer gets input credit only when seller pays GST. Choose vendors who are compliant as your customer will want to do business with vendors who are compliant.
What Does this Mean ?
Even if your customer knows you for a long time, he will select you as vendor only when your have a good compliance relationship
- Relationship Behaviour Changes

100. Impact of procurement cost/ price on the purchases
Particulars
Impact on purchase price/ cost
There will be free flow of credits in the GST regime. Cascading of the taxes will reduce substantially in the GST regime. For instance, CST element is cost in the current regime. Such costs will be trimmed in the GST regime
Reduction in the purchase cost
Passing of the GST benefit by the suppliers by reducing the price of the goods/ services - Anti-profiteering restriction in the law
Sourcing from inter-state competitive vendors due to erosion of local depots in a bid to identify better procurement pricing
Increase in freight costs
Purchases from composite dealers
Increase in cost of tax
Non-passing of the GST benefit by the vendor - Initial short term inflationary effect on the pricing of the goods
Increase in costs
Currently, reversal of VAT credits in case of stock transfers to other states
GST credit not available for set-off due to restriction of the input tax credit
High increase in purchase costs

101. Obtaining information from vendors
A simple information form must be issued to the vendors asking for filling and submitting information that needs to be updated in the vendor masters.
INFORMATION TO BE TAKEN
Name of the Vendor;
PAN of the Business;
Provisional GSTIN No. in each supplying state;
Details of Goods supplied & HSN Code;
Software used by your organization for accounting purpose;
Vendor IT readiness and support required if any;
Understanding of the GST law – trainings
Date of last reconciliation? Any open issue?
Restriction on issuing of PO if above information not provided.

104. Conclusion VAT, SERVICE TAX and GST- Issues.
Under VAT 4 methods of Tax – now may be two in GST
Principal Contractor and Sub-Contractor- joint and several liability under VAT. May not be there in GST.
TDS on WCT above Rs. 10 Lakhs. May be there in GST.
NO ITC to builders- now it will be there.
NO VAT on Completed property- Status quo maintained in GST.
Free supplies not taxed in VAT- In GST it is.
Renting of movable property like JCB, is Vat able In GST its service.

105. Conclusion VAT, SERVICE TAX and GST- Issues.
Service tax –RCM- IN GST it will be there even on ALL URD Supplies,
Exemptions in Service tax- May be continued or Not IN GST.
Completion Certificate- first Occupancy Certificate in GST.
Match and mis-match in GST it was not in Service Tax.
Reversal of ITC on closing stock.
Rental of Residential house exempt, commercial is taxable. In GST.
Interest on Instalments or EMI Charged by Builders- GST Impact.

106. Some Issues
Vat paid on agreement to sale in June and Service tax not paid on remaining balance, as its on receipt basis? Impact in GST.
URD closing stock and effect of RCM in GST?
Stamp duty value V/s Consideration ?
Valuation of land?

107. GST Building Plan Assessemnts 7th Floor: payments
6th Floor; Returns, Matching
5th Floor: Valuation, advances, interest on WIP Units
4th Floor: URD Suppliers
3nd Floor: ITC in GST inward supplies
2nd Floor: Value of Land/ JDA, etc
1st Floor of Transactional impact

108. All the best in GST …..

109. Sorry and Thanks . Happy journey of GST. Don’t Worry.. Keep Learning.

110. Be happy,,, Supply Happiness to ALL without Consideration.