Understand The Effects Of GST On Architectural Services In India
GST council introduced the new taxation system for architects and engineers with SAC codes. Like other services, architects also need to obtain GST. There are five different slabs levied in the GST rate for services, namely 0%, 5%, 12%, 18%, and 28%.
These GST rates are according to SAC codes. SAC codes are the system for classifying taxes levied as per the services developed by the service tax department in India.
Understanding the codes and other rules can be genuinely baffling for those offering architectural services. Let’s take a closer look.
Architectural Services Offered In India
There are various architectural services as the architects provide. Every service comes under a different GST slab on the gst registration portal according to the SAC code.
Design Of Building
First and foremost comes the development of designing of a new construction or the renovating structure. The design should be professional and efficient according to the standards.
Analysis And Conditions Report
For renovation, building the condition of the existing structure and for the new construction conditions of the construction site is analysed and surveyed by a surveying team.
Coordination Management Team
A specially dedicated team is required to integrate and coordinate all the processes involved, such as the designing team, plumbing team, electrification team, sustainability managing team, teams coordinating with the public agencies, interior designing.
All the goods are construction, sanitary, plumbing, designing elements, energy pieces of equipment, and all other stuff that needs to be transported to the site. For this, a very well moving logistic carrier is required.
Project Assistance For The Owner
The owner has all the rights to maintain the track record for the project. So every information and development is required to be conveyed. The owner needs to be assisted by a communicatively sound person.
Income Tax For Architects
Architects are required to pay the taxes according to their setups. Based on the setup types, the income and the tax levied are classified in the categories as follows:
The individual architects come under the category of the employees of the organisation. They are generally not required to maintain accounting or keep books.
Only the TDS should be deducted from the CTC of the employee. There is no extra expense deduction allowed from the salary except those included under Section 80C to 80U.
These are generally the consultancy or partnership firms, joint ventures Limited Liability Partnerships (LLP), or the MNCs required to keep books under Section 44AA of the Tax Act, 1961.
There are various tax deductions allowed for direct and indirect expenditures, including maintenance cost, salaries, lease payments, rentals. LLP is the most common and popularly considered term of business these days due to cost-effectiveness, maximum partners, and growth capacity.
Presumptive Taxation And GST
The audit must not be done for the cases where consumables gross receipts in previous years don’t exceed five million.
Only advance tax specified under Section 44ADA should be paid in one instalment. Mostly advance tax has to be paid quarterly, but the entire amount of possible tax scheme is remitted by 31st March.
Tax audits required to be done by qualified Chartered Accountants if gross receipts exceed Rs 5 million per annum.
Salaried or self-employed personnel are required to fill up ITR-1 by the end of July. For the partnership firms and professionals, ITR-4 is to be filled by the end of September.
SAC Code For Architectural Services
SAC code stands for Services Accounting Code for classification of services that fall under GST. The various SAC codes for the architectural services, urban land planning, and landscape architectural services are:
- 998321–Architectural advisory
- 998322–Services for residential buildings
- 998323 – Architectural services for non-residential buildings
- 998324 – Historical restoration services
- 998325 – Urban planning
- 998326 – Rural land planning
- 998327 – Project site master planning
- 998328 – Landscape architectural services and advisory
After the GST registration, a GST of 18% is applicable on the architectural services in India. Previously, this tax was only 15%.
It can not be said if GST is beneficial for architectural services or not, but surely it has made the taxation process rather easy. Implementation of GST is also believed to reduce bribery and corruption in India.
If you are a professional in the architectural domain, you should download gst certificate to fulfil tax obligations.