IMPACT OF GST ON CONTRUCTION AND REAL ESTATE INDUSTRY IN INDIA

Group Members:

 Grette Sara Titus – 19010126070 – Division A

 Vaibhavi Gangadhar – 19010125372 – Division D
 Lakshmi Pragna – 19010125424 – Division E
 Pranav Goswami – 19010125431 – Division E
 Harshit Anand – 19010125436 – Division E
 Shreyash – 19010125493 – Division E

GST ON SERVICES PROVIDED FOR REPAIRS OF CONSTRUCTED BUILDINGS

Type of Service GST Rate Relevant Relevant Example

Section Provision
Maintenance or 12% for Section 12(3)(a) Schedule II of Repair of a
repair of an affordable of CGST Act, CGST Act, leaking roof,
immovable housing 2017. 2017 painting of a
property (works projects; building,
contract 18% for other renovation of a
service) projects flat, etc.
Repair or 5% to 28% Section 9(1) of Schedule III of Repair of a car,
maintenance of CGST Act, CGST Act, maintenance of
a movable 2017 2017. a computer, etc.
property

Under GST laws in India, services provided for maintenance or repairs of an immovable
property such as a constructed building is classified as “works contract services.” The GST
rates are applicable for both Central GST and State GST or Union Territory GST. According
to the provision Section 12(3)(a) of the Act, works contract shall be treated as a supply of
services.

o Example: If a construction company provides repair services for a leaking roof of a

building, it would be considered a works contract service and be subject to GST at the
applicable rate.
Input Tax Credit

ITC is available for GST paid on services provided for repairs on a constructed building,
subject to certain conditions and restrictions. Relevant provision is Section 16 of CGST Act,
2017: A registered person shall be entitled to take credit of input tax charged on any supply
of goods or services or both which are used or intended to be used in the course or
furtherance of his/her business.

Conditions

1. The recipient of the service must have a valid tax invoice or debt note.
2. The recipient must have received the goods or services.
3. The supplier of the service must have deposited the GST with the government.

Restrictions as per section 17(5)

1. If the goods or services are used for personal purposes.

2. If the goods or services are used for making exempt supplies.
3. If the recipient has not paid the supplier for the goods or services within 180 days
from the date of the invoice.
4. If the supplier has not filed their GST return for the relevant period.
o Note: If the GST rate applicable on services provided for repairs on a constructed
building is 5% or 12%, then the recipient of the service can claim the entire amount of
GST paid as ITC. However, if the GST rate is 18% or more, then the recipient can claim
only up to 50% of the GST paid as ITC.
o Example: Suppose a construction company hires a contractor to repair the roof of a
building that it owns. The contractor charges GST of Rs. 10,000/- for the repair service.
The construction company being a registered person under GST can claim ITC on the
GST paid by it. Assuming the GST rate applicable on the services is 18%, Rs 1,800 is the
GST paid and the ITC of Rs 9000/- can be claimed. However, if the contractor fails to
deposit the GST with the government, the construction company cannot claim ITC.
Similarly, if the repair service is used for personal purposes or for making exempt
supplies, ITC cannot be claimed.