Notification No. 04/2019 – Integrated Tax (Rate) Explained

Important Keyword: Notification 04/2019 IGST Rate, GST on TDR FSI, GST real estate RCM, IGST real estate exemption, GST on unbooked flats, GST promoter liability,

Words: 2439 Read time: 13 minutes.

[F. No.354/32/2019 -TRU]
Government of India
Ministry of Finance
(Department of Revenue)

New Delhi, the 29^th March, 2019

Notification No. 04/2019 - Integrated Tax (Rate): Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council for real estate sector.

GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R   (E).- In exercise of the powers conferred by sub-section (1) of section 6 of the IGST Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.9/2017- Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 684 (E), dated the 28th June, 2017, namely:-

In the said notification, -

• in the opening paragraph, for the word, brackets and figures “sub-section (1) of section 6” the word, brackets and figures “, sub-section (3) and sub-section (4) of section 5, sub-section (1) of section 6 and clause (xxv) section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), read with sub-section (5) of section 15 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017);

• in the Table, -

(a) after serial number 43 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely: -

(1)	(2)	(3)	(4)	(5)
“43A	Heading 9972	Service by way of transfer of development rights (herein refer TDR) or Floor Space Index (FSI) (including additional FSI) on or after 1st April, 2019 for construction  of residential apartments by a promoter in a project, 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. The amount of GST exemption available for construction of residential apartments in the project under this notification shall   be calculated as under: [GST payable on TDR or       FSI (including additional FSI) or both for construction of the project] x (carpet area of the residential apartments in the project ÷ Total carpet area of the residential and commercial apartments in the project)	Nil	Provided that the promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion of value of development rights, or FSI (including additional FSI), or both, as is attributable to the residential apartments, which remain un- booked on the date of issuance of completion certificate, or first occupation of the project, as the case may be, in the following manner - [GST payable on TDR or FSI (including additional FSI) or both for construction of the residential apartments in the project but for the exemption contained herein] x (carpet area of the residential apartments in the project which remain un- booked on the date of issuance of completion certificate or first occupation ÷ Total carpet area of the residential apartments in the project)   Provided further that tax payable in terms of the first proviso hereinabove shall not exceed 1 per cent. of the value in case of affordable residential apartments and 5 per cent. of the value in case of residential apartments other than affordable residential apartments remaining un- booked on the date of issuance of completion certificate or first occupation The liability to pay integrated tax on the said portion of the development rights or FSI, or both, calculated as above, shall arise on the date of completion or first occupation of the project, as the case may be, whichever is earlier.
43B	Heading 9972	Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more, on or after 01.04.2019,  for construction of residential apartments by a promoter in a project, 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. The amount of GST exemption available for construction of residential apartments in the project under this notification shall be calculated as under:   [GST payable on upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease of land for construction of the project] x (carpet area of the residential apartments in the project ÷ Total carpet area of the residential and commercial  apartments in the project).	Nil	Provided that the promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion of upfront amount (called as premium, salami, cost, price, development charges or by any other name) paid for long term lease of land, as is attributable to the residential apartments, which remain un- booked on the date of issuance of completion certificate, or first occupation of the project, as the case may be, in the following manner - [GST payable on upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long term lease of land for construction of the residential apartments in the project but for the exemption contained herein] x (carpet area of the residential apartments in the project which remain un- booked on the date of issuance of completion certificate or first occupation ÷ Total carpet area of the residential apartments in the project);   Provided further that the tax payable in terms of the first proviso shall not exceed 1 per cent. of the value in case of affordable residential apartments and 5 per cent. of the value in case of residential apartments other than affordable residential apartments remaining un- booked on the date of issuance of completion certificate or first occupation. The liability to pay integrated tax on the said proportion of upfront amount (called as premium, salami, cost, price, development charges or by any other name) paid for long term lease of land, calculated as above, shall arise on the date of issue of completion certificate or first occupation of the project, as the case may be.

• after paragraph 1, the following paragraphs shall be inserted, namely, -
  “1A. Value of supply of service by way of transfer of development rights or FSI by a person to the promoter against consideration in the form of residential or commercial apartments shall be deemed to be equal to the value of similar apartments charged by the promoter from the independent buyers nearest to the date on which such development rights or FSI is transferred to the promoter.
  1B. Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first occupation, as the case may be.”
• in paragraph 3 relating to Explanation, after clause (iv), the following clause shall be inserted, namely: -
  “(v) The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).
• The term “affordable residential apartment” shall have the same meaning as assigned to it in the notification No. 8/2017- Integrated Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28^th June, 2017 vide GSR number 683(E) dated 28^th June, 2017, as amended.

• The term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

• The term “project” shall mean a Real Estate Project or a Residential Real Estate Project.

• the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in clause (zn) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

• The term “Residential Real Estate Project (RREP)” shall mean a REP 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 REP;

• The term “carpet area” shall have the same meaning as assigned to it clause (k) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).

• “an apartment booked on or before the date of issuance of completion certificate or first occupation of the project” shall mean an apartment which meets all the following three conditions, namely-
  • part of supply of construction of the apartment service has time of supply on or before the said date; and
  • consideration equal to at least one instalment has been credited to the bank account of the registered person on or before the said date; and
  • an allotment letter or sale agreement or any other similar document evidencing booking of the apartment has been issued on or before the said date.
• “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built.”.

2. This notification shall come into force with effect from the 1^st day of April, 2019.

(Pramod Kumar)
Deputy Secretary to the
Government of India

Note: -The principal notification No. 9/2017 - Integrated Tax (Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G. S. R. 684 (E), dated the 28^th June, 2017 and was last amended by notification No. 2/2019 – Integrated Tax (Rate), dated the 4^th February, 2019 vide number G. S. R. 86(E), dated the 4^th February, 2019.

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📚 Frequently Asked Questions (FAQs): Notification No. 04/2019 - Integrated Tax (Rate)

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✅ Conclusion & Expert CTA

Notification No. 04/2019 – Integrated Tax (Rate) fundamentally reshaped GST for real estate by balancing tax relief for booked homes with RCM accountability for unsold inventory. While beneficial, it demands accurate valuation, strict timelines, and error-free GST returns.

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Download PDF: Notification No. 04/2019 - Integrated Tax (Rate)

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More Information: https://taxinformation.cbic.gov.in/

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