Important Keyword: Notification No. 02/2021 -Union Territory Tax (Rate), Notification 02/2021 UTGST, GST 43rd Council meeting updates, UTGST Amendment 2021, Finodha GST filing, ITC for landowner-promoter, marine service GST rate, GST updates India 2021, Union Territory Tax Rate,
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Table of Contents
[F. No.354/53/2021 -TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 2nd June, 2021
Notification No. 02/2021 - Union Territory Tax (Rate): Seeks to amend notification No. 11/2017- Union Territory Tax (Rate) so as to notify CGST rates of various services as recommended by GST Council in its 43rd meeting held on 28.05.2021.
[TO BE PUBLISHED IN THE GAZETTE OFINDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R......(E).- In exercise of the powers conferred by sub-sections (1), (3) and (4) of section 7, sub- section (1) of section 8, clauses (iv), (v) and (xxvii) of section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), read with sub-section (5) of section 15, sub-section (1) of section 16 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Union Territory Tax (Rate), dated the 28thJune, 2017, published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 702(E), dated the 28thJune, 2017, namely:-
In the said notification, in the Table, -
(a). in serial number 3, against items (i), (ia), (ib), (ic) and (id) in column (3) , in the conditions in column (5), in the fourth proviso, in the Explanation, after clause (ii), the following clause shall be inserted, namely-
“(iii) the landowner-promoter shall be eligible to utilize the credit of tax charged to him by the developer- promoter for payment of tax on apartments supplied by the landowner-promoter in such project.” ;
(b). in serial number 25,-
i. after item (ia) in column (3) and the entries relating thereto, in columns (3), (4) and (5), the following items and entries shall be inserted, namely –
| (3) | (4) | (5) |
| “(ib) Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts. | 2.5 | -” |
ii. in item (ii) in column (3), for the word, brackets, figures and letter “ and (ia)”, the brackets, figures, letter and word “,(ia) and (ib)” shall be substituted.
2. This notification shall come into force with effect from the 2nd day of June, 2021.
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: -The principal notification No. 11/2017 - Union Territory Tax (Rate), dated the 28thJune, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 702(E), dated the 28th June, 2017 and was G.S.R. 223(E), dated the 26th March, 2020.
📚 Frequently Asked Questions (FAQs): Notification No. 02/2021 - Union Territory Tax (Rate)
Q1: What is Notification No. 02/2021 - Union Territory Tax (Rate)?
Answer:
Notification No. 02/2021-UTGST (Rate) amends Notification No. 11/2017 to implement GST rate and ITC clarifications recommended during the GST Council’s 43rd meeting. It introduces a provision allowing landowner-promoters to utilize tax credit charged by developer-promoters and adds new service rate entries, like maintenance of ships and vessels at 2.5% UTGST.
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Q2: What is the key highlight for landowner-promoters in this notification?
Answer:
The amendment adds clause (iii) under the explanation in Serial No. 3, which allows landowner-promoters to use input tax credit (ITC) for paying tax on apartments they supply in a project.
This clarifies long-standing confusion under Section 16 of the CGST Act, 2017 regarding ITC eligibility in joint development agreements.
Q3: How does this notification impact the real estate sector?
Answer:
This update benefits landowner-promoters by:
Reducing double taxation risks.
Allowing seamless input tax credit utilization.
Promoting ease of doing business in real estate projects.
Example:
If a landowner transfers development rights to a builder and later sells some units, the ITC on tax charged by the builder can now be used to offset GST liability.
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Q4: What new service entry was added under Serial No. 25?
Answer:
A new entry (ib) was added:
“Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts.”
📊 UTGST Rate: 2.5% (thus total GST = 5%)
This benefits the shipping and marine maintenance industry, encouraging the domestic ship-repair ecosystem.
Q5: From when is this notification effective?
Answer:
The changes came into effect from 2nd June 2021, as stated in Clause 2 of the notification.
Q6: Which sections of the Acts empower this notification?
Answer:
The notification draws authority from:
Section 7(1), (3), (4) and Section 8(1) of the Union Territory GST Act, 2017
Section 15(5) and Section 16(1) of the CGST Act, 2017
Section 148 of the CGST Act, which empowers the government to prescribe special procedures for certain classes of taxpayers.
Q7: What are the benefits for marine service providers under this update?
Answer:
Marine service providers enjoy:
Lower GST rate (5% total) for ship maintenance and repair.
Better cash flow management.
Reduced compliance burden through simplified invoicing.
💡 Example:
A marine workshop in Kochi performing ship engine repairs now attracts only 5% GST, making Indian ports more competitive globally.
Q8: How does this link with Notification No. 11/2017 - UTGST (Rate)?
Answer:
Notification No. 11/2017 originally specified GST rates for various services.
Notification No. 02/2021 updates it by:
Adding new service categories.
Modifying clauses related to real estate ITC utilization.
Making rate structures more industry-friendly.
For clarity on GST classification and rates, explore Finodha GST Registration
Q9: How does this amendment align with the GST Council’s 43rd meeting?0
Answer:
In the 43rd GST Council meeting, the government emphasized post-pandemic economic recovery.
This amendment directly supports:
Construction sector via ITC flexibility.
Shipping industry via lower GST rates.
It reflects India’s commitment to revive sectors hit by COVID-19 through fiscal reliefs.
Q10: What is the connection with Notification No. 01/2021 - Compensation Cess (Rate)?
Answer:
Both notifications were outcomes of the 43rd GST Council meeting.
While Notification No. 01/2021 - Compensation Cess (Rate) dealt with revised cess rates, Notification No. 02/2021 - UTGST (Rate) focused on service rate amendments and ITC clarifications under UTGST.
Q11: How should businesses implement this change in GST filings?
Answer:
Businesses should:
Update their GST software with new rate structures.
Adjust Input Tax Credit records accordingly.
Ensure correct reporting in GSTR-3B and GSTR-1.
📄 File your updated GST returns effortlessly via Finodha GST Return Filing
Q12: What happens if a business fails to apply the correct rate?
Answer:
Applying an incorrect GST rate may result in:
Tax shortfall penalties under Section 73 or 74 of CGST Act.
Interest under Section 50 for late payment.
Hence, businesses should regularly review GST notifications and update compliance settings.
Q13: Is this notification applicable to all Union Territories?
Answer:
Yes ✅
This applies to all Union Territories such as Delhi, Chandigarh, Lakshadweep, Puducherry, and others covered under the UTGST Act, 2017.
Q14: Can the landowner-promoter claim ITC even after completion of the project?
Answer:
No ⛔
ITC can be utilized only before the project completion certificate or first occupation, whichever is earlier — as per Rule 42 and 43 of the CGST Rules, 2017.
Q15: Where can I get expert assistance for GST or UTGST compliance?
Answer:
You can get professional assistance from Finodha, India’s trusted platform for:
GST Registration
GST Return Filing
ITR Filing
Business Setup
🏁 Conclusion
Notification No. 02/2021 - Union Territory Tax (Rate) simplifies compliance for real estate developers and marine service providers, ensuring smoother tax credit usage and reduced GST rates.
If you’re a business owner, keeping track of such amendments is vital for avoiding penalties and optimizing tax savings.
👉 Stay compliant, save time, and reduce errors with Finodha’s GST Compliance Services
Download PDF: Notification No. 02/2021 - Union Territory Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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