New Delhi: The GST Council, in its 33rd meeting today, is expected to bring taxing on under-construction residential properties at 5 per cent, down from 12 per cent currently. The tax rate cut was proposed by the GoM earlier this month.
The Group of Ministers, which was set up last month to analyse tax rates and issues/challenges being faced by the real estate sector under the GST regime, had also favoured slashing GST on affordable housing from 8 per cent to 3 per cent.
Currently, GST is levied at 12 per cent with Input tax credit (ITC) 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.
The effective pre-GST tax incidence on such housing property was 15-18 per cent.
GST, however, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale.
There have been complaints that builders are not passing on the ITC benefit to consumers by way of reduction in price of the property after the rollout of GST.
“Our Government wants the GST burden on home buyers to be reduced and accordingly we have moved the GST Council to appoint a Group of Ministers to examine and make recommendations in this regard at the earliest,” Piyush Goyal, who was handling the finance ministry then, had said in his budget speech.
A state ministerial panel set up to review the tax rate on lottery has favoured a uniform GST rate of either 18 per cent or 28 per cent, PTI reported. Currently, a state-organised lottery attracts 12 per cent GST while a state-authorised lottery attracts 28 per cent tax.
However, Kerala and AAP-ruled Delhi on Tuesday demanded deferment of the GST Council meeting, saying a decision on “crucial issues” of GST rates on real estate sector and lottery should not be taken through a video conference meet.
Kerala’s Finance Minister Thomas Isaac said he has written to Jaitley asking for a regular meeting to discuss the real estate issue and the proposed reduction in lottery rates. “It will be more appropriate to discuss (these) in a regular meeting. I had also asked for deferment of the meeting of GoM on lottery (on Monday) on medical grounds but they went ahead with it and have suggested lowering the GST rate on lottery. This is malafide since a reduction in rate will not only impact revenues of states and Centre but benefit private middlemen and the lottery mafia. A uniform rate on lottery by removing the distinction between state-run and state-authorised lottery will benefit the lottery mafia,” Isaac told The Indian Express.
Delhi Finance Minister Manish Sisodia, in his letter to Jaitley, said, “…both the agenda items i.e. Special Scheme for Real Estate sector and Single rate of tax on lottery are of crucial nature and requires detailed discussion before arriving at a considered decision on the matters. Such kind of crucial issues cannot be discussed through a video conference and conveying of a physical meeting is important to take a consolidated decision.”
The Council meeting is scheduled to be held via video conference with Union Finance Minister joining from North Block, while state finance ministers connecting from their respective states.