Notification No. 18/2023 GST on Construction Services

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Notification No. 18/2023 - Integrated Tax (Rate): Seeks to Amend Notification No 12/2017- Integrated Tax (Rate) Dated 28.06.2017.

[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 clause (xiii) of section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read with sub-section (3) of section 54 of the Central Goods and Services Tax Act, 2017 (12 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 amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 12/2017-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. 687(E), dated the 28th June, 2017, namely:-

In the said notification, in opening paragraph, for the words, brackets, letters and figures “specified in sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act”, the words, “of construction of a complex, building or a part thereof, intended for sale to a buyer, wholly or partly, where the amount charged from the recipient of service includes the value of land or undivided share of land, as the case may be, 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”, shall be substituted.

2. This notification shall come into force with effect from the 20^th October, 2023.

(Rajeev Ranjan)
Under Secretary to the Government of India

Note: - The principal notification no. 12/2017-Integrated Tax (Rate) dated the 28^th June,2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 687(E),dated the 28^th June, 2017.

📚 Frequently Asked Questions (FAQs): Notification No. 18/2023 - Integrated Tax (Rate)

Q1: What is Notification No. 18/2023 - Integrated Tax (Rate)?

Answer:
Notification No. 18/2023 - Integrated Tax (Rate) was issued on 19th October 2023 to amend Notification No. 12/2017 - Integrated Tax (Rate). It specifically updates the language around exemption on construction services where land value is included in the total consideration.

Q2: What change has been made in Notification 12/2017 through this amendment?

Answer:
The amendment replaces the earlier reference to "sub-item (b) of item 5 of Schedule II" with clearer language, specifying that exemption applies to construction services intended for sale where the value includes land or undivided share of land, unless the full amount is received after the completion certificate or first occupation—whichever is earlier.

Q3: When does Notification No. 18/2023 come into effect?

Answer:
This notification comes into force from 20th October 2023.

Q4: How does this change impact builders and developers?

Answer:
Builders and developers must now ensure that GST exemptions on construction services apply only when full consideration is received after the completion certificate or first occupation. Early payments may attract GST even if land value is included.

Q5: What is the significance of the phrase "except where the entire consideration has been received after issuance of completion certificate"?

Answer:
This clause emphasizes that GST exemption is not applicable if even partial payment is received before the project’s completion certification or first occupation, which makes project timing and payment structure critical for tax treatment.

Q6: Who issued Notification 18/2023 and under what authority?

Answer:
The Central Government issued it under clause (xiii) of section 20 of the IGST Act, 2017 read with sub-section (3) of section 54 of the CGST Act, 2017, based on the GST Council's recommendation.

Q7: Does this amendment affect ongoing real estate projects?

Answer:
Yes, developers must re-evaluate their payment structures for ongoing projects to ensure compliance. Those who have received partial payments before project completion may now be liable for GST on those transactions.

Q8: What does "value of land or undivided share of land" mean under GST law?

Answer:
It refers to the portion of land value included in the price of the property. Under this notification, even if land value is part of the charge, GST still applies unless conditions of completion and timing are met.

Q9: Where can I get help with GST compliance on construction-related services?

Answer:
You can connect with GST professionals at www.Finodha.in or visit their page on GST Compliance here: 👉 https://finodha.in/gst-compliance/

Q10: What steps should real estate businesses take after this notification?

Answer:
✅ Review all payment collection timelines
✅ Update agreements with buyers to reflect GST implications
✅ Consult GST experts for impact analysis
✅ File returns accurately via: https://finodha.in/gst-return-filing/
✅ Consider registration for new business setups at: https://finodha.in/setup-business/