GOODS AND SERVICES TAX ON CONSTRUCTION BUSINESS

Goods and Services Tax was introduced on 1st July 2017 and it replaces various indirect taxes at Central level as well as State level. Real Estate industry is one of the important industry for economy growth and interaction of general public at large. At the time of introduction of GST , the rate of tax for construction business is 12% and 18%, after the various representation from construction industry the rate of tax is reduced to 1% and 5% for residential building with effect from 1st April 2019 with certain conditions. The Construction activities has been divided into three category namely 1. Construction Contract for Construction of Commercial or Residential building. 2. Sale of Residential Flats by builder to general public or buyer. 3. Construction of Residential building under Joint Development Agreement. The tax liability and point of tax in the hands of construction industry or builder on above category of construction activities is analysed and explained in detail with simple example.