GST applicability on Preferential Location Charges (PLC):

Preferential Location Charges in short PLC are the amounts collected by the builder of residential/commercial/industrial complex for allowing the buyers a choice of location of apartment/flat /Complex construction.

Allowing choice of location of apartment is integral part of supply of construction services and therefore, location charge is nothing but part of consideration charged for supply of construction services before issuance of completion certificate.

If a buyer of apartment/Flat opted for preferential location of apartment, then there will be supply of two types of services being construction services as a main service and Preferential location services as an additional service which is naturally bundled with the main service.

PLC Being collected along with the consideration for supply of construction services for the apartment forms part of composite supply where supply of construction services is the main service and PLC is naturally bundled with it.

Now its time to discuss about the crux of our topic of GST applicability:

Since PLC amount will be collected by the builder/Promoter before issuance of completion certificate, GST is applicable on PLC amount at the GST rate applicable on the supply of construction services which is a principal Supply (Main Supply). For the better understanding of GST rate applicability on construction services. GST will be charged @ 1% or 5% or 18% as applicable perse on such construction services.

So, GST @ 1% or 5% or 18% will be applicable on PLC amount.

Useful Links: 234/28/2024-GST | Goods and Services Tax Council – Pg No 5

Disclaimer : The contents are based on interpretations of the applicable sections and rules, and should not be construed as personal opinions

Content by

CA R Jeevan Kumar

CA | CMA | AIR 30