RCM on URD purchase
This query is : Resolved
24 March 2025
Hello, I’m a real estate developer.
I want to know as per 80:20 rule,
80% of project gst bills should take.
And 20% is applicable on service or goods ?
Then how rcm will calculate on this?
RCM on URD PURCHASE.
I want to know as per 80:20 rule,
80% of project gst bills should take.
And 20% is applicable on service or goods ?
Then how rcm will calculate on this?
RCM on URD PURCHASE.
24 March 2025
The 80:20 rule in real estate GST refers to a requirement that at least 80% of the inputs and input services used in a construction project must be procured from registered suppliers. This rule is crucial for developers to be eligible for Input Tax Credit (ITC) on their purchases.
Key Points about the 80:20 Rule:
Eligibility for ITC: To claim ITC, developers must ensure that 80% of their procurement is from registered suppliers. If they fail to meet this threshold, they are required to pay GST on the shortfall at a rate of 18% under the reverse charge mechanism (RCM).
Exclusions: Certain items are excluded from the calculation of the 80% threshold. These include:
Services related to the grant of development rights.
Long-term leases of land.
Floor Space Index (FSI).
Utilities such as electricity and fuels (high-speed diesel, motor spirit, natural gas) used in construction.
Key Points about the 80:20 Rule:
Eligibility for ITC: To claim ITC, developers must ensure that 80% of their procurement is from registered suppliers. If they fail to meet this threshold, they are required to pay GST on the shortfall at a rate of 18% under the reverse charge mechanism (RCM).
Exclusions: Certain items are excluded from the calculation of the 80% threshold. These include:
Services related to the grant of development rights.
Long-term leases of land.
Floor Space Index (FSI).
Utilities such as electricity and fuels (high-speed diesel, motor spirit, natural gas) used in construction.
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