RCM not applicable to Labour Charges, daily wages & Contract Labour

TELANGANA AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Case Name: Sri Bhavani Developers (GST AAR Telangana)

     Advance Ruling No. TSAAR Order No. 38/2022

     Date of Judgement/Order: 14/07/2022

The ruling is given as below:

In view of the above discussion, the questions raised by the applicant are clarified as below:

Questions 1.  Whether notification 4/2019 can be followed and GST be paid on RCM basis for the share of land lord as the project is falling under “other than On-going Projects” as it can be considered as new project ?

Ruling :- According to the statement of relevant facts having a bearing on the questions raised by the applicant, at Para 6(c) work on the project commenced in June 2018. The Notification No. 03/2019 makes a distinction between ‘Ongoing project’ in clause (xx) of Para 4 and ‘Other than ongoing project’ in clause (xxviii) of Para 4. Accordingly ‘Other than ongoing project’ means a project which commences on or after 01.04.2019. Therefore the project undertaken by the applicant does not fall under this definition as claimed by him in the statement of facts submitted separately on 21.12.2021.

Questions 2. Is RCM applicable to daily wages, Labour Charges and Contract Labour?

Ruling :- No

Questions 3. Whether there is any limit on the percentage of material to be used in project for Eg: cement 15%, sand 10% etc ?

Ruling :- No

Questions 4. Whether Salaries, Incentives, Brokerage, Remuneration and interest on Working Capital are liable for RCM?

Ruling :- No

Questions 5. In a project of combination of affordable Flats (Carpet Area is less than 60Sq Mts), and Non affordable flats (Carpet Area is more than 60Sq Mts), can different rate of tax be adopted for different units, i.e., GST 1% in case of affordable Units and 5% in case of Non affordable units based on the Carpet area?

  Ruling :- Yes

 Questions 6. That, the customer is entering into two types of agreements at the time of selling the semi finished residential flat.

c) “SALE AGREEMENT” and

d) Completion of semi finished works called “WORK ORDER”, In such case what is the rate of tax for:

c) For SALE DEED @ 5%

d) For WORK ORDER @ 18% or 12% or 5%.

Whether they are eligible for ITC in case of 18% /12%?

What is the tax rate in case of affordable housing project in the above situation?

Ruling:- If the initial contract for land and building, even if entered through (2) different un severable agreements, constitutes a single contract and hence will attract tax @0.5% for affordable housing and @2.5% for other housing under CGST & SGST respectively without ITC. However any other agreement which is beyond the scope of initial agreement and is a severable agreement vis-a-vis the initial agreement then the construction made under this contract will attract 9% tax under CGST & SGST each with ITC.