GST Council To Consider Reducing Tax On Under-Construction Properties
The GST Council will discuss the proposal to lower goods and services tax on under-construction properties when it meets tomorrow.
The proposal is from a suggestion by a ministerial panel that recommended reducing the indirect tax on under-construction properties to 5 percent without allowing the benefit of input tax credit. A group of ministers headed by Gujarat Deputy Chief Minister Nitin Patel also suggested reducing GST on affordable housing projects to 3 percent. Both these proposals will be taken up at the meeting, which will be held through video conferencing.
The move will be key to wooing electorate months before the general election as it’s intended to lower prices of affordable houses and address stress in the real estate sector. At present, GST on under-construction properties is 12 percent, while affordable housing projects attract 8 percent GST with the facility for builders to avail credit on inputs. Ready-to-move-in properties don’t attract GST.
The government introduced a raft of measures in the real-estate sector over the past two years such as a law that protects the interests of buyers, GST, demonetisation and cracked down on "benami" property—or property held via proxy. The cumulative effect of these measures—aimed at widening the tax net and stifling the parallel economy run by unaccounted money—was a temporary slowdown in the sector.
Uniform Rate For Lotteries
On Monday, another group of ministers formed to address issues related to taxation of lotteries favoured a uniform rate of 18 percent or 28 percent for both state-run and state-authorised lotteries. The panel, which was constituted on Jan. 15, had to submit its recommendations to the GST Council in its next meeting, according to the terms of reference of the panel. However, it’s unlikely that the proposal will be taken up tomorrow, and is expected to be deliberated further, a government official said on condition of anonymity.
Currently, state-organised lottery attracts 12 percent GST while the tax rate on state-authorised lotteries is 28 percent.