Get GST for Real Estate and Construction
The Goods and Services Tax (GST) is a crucial regulatory compliance for Indian real estate and construction companies. The GST rule requires developers, builders, and contractors to register if their annual turnover surpasses Rs 20 lakhs (Rs 10 lakh in special category states). The GST applies to the supply of goods and services, including materials, labor, and other construction-related activities. This guide will take you through the benefits, procedures, necessary documents, and frequently asked questions about obtaining GST registration for your real estate or construction business.
Benefits
- GST for Real Estate and Construction Input Tax Credit (ITC): Builders and contractors can also collect ITC on the materials or services used in construction projects, resulting in a reduction of tax liability.
- Transparency and Compliance: GST registration ensures that your business adheres to the legal requirements, fostering trust among customers and stakeholders.
- Efficient Taxation System: GST groups the several taxes together under a single umbrella and has streamlined all of them, thus enabling real estate businesses to conveniently manage one tax stream.
- More competitive advantage to be passed on with lower costs: By providing ITC & etc., businesses can use the above tools of benefit in improving profit margin. Due to the cascading effect, businesses can reduce costs associated with pricing their products and services, thereby enabling them to pass these savings on to their customers.
- Business Friendly: One Nation, One Tax leads to less paperwork and state inter-operations.
Procedure for GST Registration
The GST registration process is straightforward and can be done online via the GST portal. Below are the key steps:
- Go to the official GST portal GST.gov.in.
- Register New: Select the Register New option and input all your personal information, such as your legal name, Permanent Account Number (PAN), and email address of the business, on the homepage.
- Verification: After entering your details, you will receive an OTP for verification on your registered mobile number and email.
- Fill out the Application Form (GST REG-01): Business Address, Bank Account Details, and Authorized Signatory.
- Upload Documents—Upload the documents needed for proof of identity, address, and business registration.
- Apply: Apply electronically; after entering all the necessary information and uploading the documents that are required, a digital signature is then used, or an EVC (Electronic Verification Code) can be generated for this purpose by either generating it immediately from their page, which you will view on the "Generate" button seen just below in green colour.
- Acknowledgement Receipt: After submission, you will receive an acknowledgement in the form of an ARN (Application Reference Number). Use this ARN to track the status of your application.
- GSTIN Allotment: Once the authorities verify your application, you will receive a GSTIN (Goods and Services Tax Identification Number), confirming your registration.
Documents
The following documents are required for registration under the GST:
- PAN card of the business or applicant: A PAN number is compulsory for GST registration.
- Address Proof: Agreement of partnership, certificate of incorporation, or memorandum, whereas opening a bank account is also valid address proof.
- Identity and Address Proof of Promoters/Directors: Aadhaar card, passport, or voter ID card of the promoters or directors.
- Business Address Proof: A copy of the electricity bill, rent agreement, or property tax receipt for the registered address.
- Bank Account Details: A copy of the cancelled check, bank statement, or passbook with account details.
- Digital Signature: Required for verification, especially for companies and LLPs.
- Photographs of Promoters/Directors: Recent passport-sized photographs of key stakeholders.
Frequently Asked Questions (FAQs)
Q1: Does GST registration apply to all real estate and construction businesses?
A: GST registration is compulsory if turnover exceeds ₹20 lakhs (₹10 lakh for special category states). Even small businesses can go for voluntary registration to take advantage of input tax credit (ITC) as well.
Q2: Do builders receive ITC on every type of construction material?
A: Yes, ITC applies to certain items in the form of cement, steel, and other raw materials that are required in the construction business. Nevertheless, input credits cannot be claimed on the work contracts for the building of immovable property unless the expenditure is on further supply.
Q3: In how many days can a GST registration be done as regards the business of real estate?
A: If all the necessary documentation and details are sufficiently submitted and verified, then it usually takes around seven days to ten working days.
Q4: Can under-construction properties be taxed under the GST regime?
A: Yes, GST is charged on the sale of the units that are still under construction but not on completed and so-called ready-to-be-occupied units.
Q5: What is the GST rate for construction services?
A: The GST rate for construction services is 18% in general concern; according to the type of service, the rate might vary and can be reduced, like affordable housing.
