GST Council To Mull 5% Tax On Under-Construction Flats In Next Meeting
The GST Council is slated to meet on Jan. 10 to discuss lowering the Goods and Service Tax on under-construction flats and houses to 5 percent, as well as hiking exemption threshold for small and medium enterprises.
"The next meeting is scheduled for Jan. 10," an official told PTI. The council, in its previous meeting on Dec. 22, 2018, had rationalised the 28 percent tax slab and reduced rates on 23 goods and services.
This would be the 32nd meeting of the council, which is chaired by Finance Minister Arun Jaitley and comprises his state counterparts.
Jaitley had said that the next meeting would consider rationalisation of tax rates on residential properties and raising the threshold limit for micro, small and medium enterprises from the current Rs 20 lakh, during a media briefing after the recent council meeting.
Also, the council would consider a composition scheme for small suppliers, apart from discussing a calamity cess as well as GST rates on lottery. The GST Council is likely to consider lowering GST on under-construction flats and houses to 5 percent, an official said.
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Currently, the Goods and Services Tax is levied at 12 percent on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
An official said that this 12 percent GST rate ideally would have been partially offset by way of taxes paid on inputs by builders and hence the actual incidence of GST on under-construction home buyers would have been around 5-6 percent. However, builders are not passing on the input tax credit benefit to consumers.
"One of the proposals before the council is to lower the GST rate to 5 percent for builders who purchase 80 percent of inputs from registered dealers," an official said.
Also the report of group of ministers looking into the concerns of MSMEs under the GST regime would be taken up for consideration. Currently, businesses with a turnover of up to Rs 20 lakh are exempted from GST. The Council could consider hiking the threshold to Rs 75 lakh for only MSMEs.
Besides, the council would consider composition scheme for small suppliers, since it felt that the number of small service providers getting registered under GST was not on expected lines.
"An in-principle unanimous decision was taken that a composition scheme be framed for small service providers. The threshold and composition charge would be decided in the next meeting," Jaitley had said on Dec. 22. With regard to GST on lottery, currently, state-organised lottery attracts 12 percent GST, while state-authorised lottery attracts 28 percent.
Also, a view on levying calamity cess under the GST would be discussed by the council. Bihar Deputy Chief Minister Sushil Modi led-group of ministers had in October had decided to seek states' views on whether a state-specific or a nationwide “disaster tax” should be levied under the GST.
The GST Council, the highest decision-making body of the new tax regime, had in September decided to set up a seven-member Group of Ministers to consider a cess for Kerala flood rehabilitation.