GST Council Defers Decision On Tax Cut Proposal For Real Estate Sector
Finance Minister Arun Jaitley adjourned the Goods and Services Tax Council meeting to Sunday in Delhi after some states said a decision on rates for the real estate sector should not be taken through video conferencing.
“I have always had an approach of moving as per consensus and since some of the states wanted a meeting where members are physically present, keeping the idea of consensus in mind, I adjourned the meeting to Sunday so that a physical meeting can be held,” Jaitley told reporters.
The council had to discuss a proposal recommended by a ministerial panel to bring down GST on under-construction properties to 5 percent from 12 percent. The group of ministers, headed by Gujarat Deputy Chief Minister, had also suggested lowering the tax rates on affordable homes to 3 percent or lower from 8 percent. But developers won’t be allowed to claim input tax credit.
The council on Sunday may even consider lowering GST for affordable housing projects to nil to 2 percent as the effective tax rate currently is about 1.5 percent, according to an official present at the meeting.
It was a wise decision to defer the meeting, Kerala Finance Minister Thomas Isaac said. “There are a few technical problems that need to be sorted such as valuation of land, the 80 percent sourcing norm for builders from registered dealers, and concerns regarding revenue loss for the government,” Isaac told BloombergQuint.
Builders will have to source 80 percent of their raw materials from registered dealers so that they don’t evade taxes as they won’t be allowed to claim credit for their inputs, the official quoted above said requesting anonymity as he was not authorised to speak to media.
The real estate sector is critical for all states, hence unanimity in decision-making will assist in uniform implementation of the decisions of the GST Council, said MS Mani, senior director at Deloitte India.
The council also didn’t take any decision on having a unified tax rate for lotteries. Another group of ministers suggested having a uniform rate of 18 percent or 28 percent for both state-run and state-authorised lotteries. Currently, the state-organised lottery attracts 12 percent GST, while a tax rate of 28 percent is levied on state-authorised lotteries.
Isaac, however, said having a unified rate will benefit private lottery mafia. “States will also lose tax revenue by lowering GST for state-authorised lotteries,” he told BloombergQuint.
Return Filing Date Extended
The GST Council extended the deadline for businesses to file sales returns for January till Friday due to high volumes of returns being filed on the last day. The last day for filing GSTR-3B returns was Feb 20.
Due to disturbance in Jammu and Kashmir, Jaitley said the council decided to extend the last date for filing GSTR-3B returns in the state to Feb. 28.