Important Keywords: Order No. 3/2019 – Union Territory Tax, GST credit rule, construction GST credit, UT GST clarification, input tax credit, Finodha GST compliance,
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[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 29th March, 2019
THE UNION TERRITORY GOODS AND SERVICES TAX (REMOVAL OF DIFFICULTIES) ORDER, 2019
Order No. 3/2019 – Union Territory Tax: To remove difficulty in case of supply of services covered by clause (b) of paragraph 5 of Schedule II of the CGST Act, 2017.
S.O. (E). –Whereas, clause (v) of section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) read with sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this Order referred to as the “said Act”) provides that the input tax credit shall be restricted to so much of input tax as is attributable to the taxable supplies;
And whereas clause (v) of section 21 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), read with sub-section (3) of section 17 of said Act provides that the value for the purpose of sub-section (2) of section 17 of the said Act shall be such as prescribed by rules;
Now, therefore, in exercise of the powers conferred by section 26 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the Central Government,on recommendations of the Council,hereby makes the following Order, namely: –
1. Short title. –This Order may be called the Union Territory Goods and Services Tax (Third Removal of Difficulties) Order, 2019.
2. For the removal of difficulties,it is hereby clarified that in case of supply of services covered by clause(b) of paragraph 5 of Schedule II of the said Act, the amount of credit attributable to the taxable supplies including zero rated supplies and exempt supplies shall be determined on the basis of the area of the construction of the complex, building, civil structure or a part thereof,which is taxable and the area which is exempt.
3. This order shall come into force with effect from the 1st of April, 2019.
[F. No. 354/32/2019-TRU]
(Pramod Kumar)
Deputy Secretary to the Government of India
Frequently Asked Questions (📚 FAQs on Order No. 3/2019 – Union Territory Tax)
📌 Q1: What is Order No. 3/2019 – Union Territory Tax?
Answer:
Order No. 3/2019 – Union Territory Tax clarifies how to calculate the GST input tax credit for services under clause (b) of paragraph 5 of Schedule II, specifically for construction projects.
👉 Need GST credit calculation help? Talk to Finodha GST Experts
🏗️ Q2: What does clause (b) of paragraph 5 of Schedule II cover?
Answer:
It covers the supply of services by way of construction of complex, building, or civil structure, treating such construction activities as taxable services under GST.
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📐 Q3: How is input tax credit determined as per this order?
Answer:
The input tax credit is determined by apportioning credit between taxable and exempt areas based on the area of construction (taxable area vs. exempt area).
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⏳ Q4: From when is this order applicable?
Answer:
This order came into effect on 1st April 2019 and applies to all construction services provided in Union Territories under the GST framework.
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📜 Q5: Why was Order No. 3/2019 – UT Tax issued?
Answer:
The order was issued to remove difficulties in determining credit for complex construction projects and ensure standardized calculation based on construction area.
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🏢 Q6: Who needs to comply with this order?
Answer:
✔️ Builders, developers, and real estate companies in Union Territories.
✔️ Contractors supplying taxable construction services.
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⚠️ Q7: What if the input credit is incorrectly calculated?
Answer:
❌ Incorrect calculations may lead to audits, tax demands, and penalties.
✅ Accurate credit apportionment is essential for smooth compliance.
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🧾 Q8: What role does exempt supply play in GST credit calculation?
Answer:
Exempt supply refers to the portion of the project that is non-taxable (such as completed units sold after completion certificate). This affects the amount of ITC that can be claimed.
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🚀 Q9: How can Finodha help with construction-related GST compliance?
Answer:
GST Registration
GST Return Filing
ITC reconciliation support
Private Limited Registration
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📢 Q10: How to stay informed on GST rules for real estate and construction?
Answer:
Follow Finodha GST Compliance Hub
Subscribe to newsletters for regular updates
Follow Finodha’s LinkedIn & Twitter pages
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✅ Conclusion:
Order No. 3/2019 – Union Territory Tax brings much-needed clarity on GST input tax credit calculations for construction services.
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Download PDF: Order No. 3/2019 – Union Territory Tax
More Information: https://taxinformation.cbic.gov.in/
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