Jaitley likely to chair GST Council meet next week; lower levy for housing on the cards

Shishir Sinha New Delhi | Updated on February 13, 2019 Published on February 13, 2019

Union Minister Arun Jaitley   -  AP

Union Minister Arun Jaitley is likely to chair the 33rd meeting of the GST (Goods and Services Tax) Council on February 20, which among other things will consider slashing tax on under-construction flats.

The meeting could be the last one before the code of conduct for the general elections comes into effect.

Jaitley, who has just returned from the US after treatment, is expected to resume work soon.

Meanwhile, officials in the Finance Ministry said the agenda for February 20 meeting will include proposal to lower GST on under-construction flats and affordable housing. A Group of States’ Finance Ministers (GoFMs) has favoured lowering GST rates on residential houses to 5 per cent without input tax credit and to 3 per cent for those under affordable housing. Both the rates will be without input tax credit and one condition for 5 per cent is to source at least 80 per cent of materials from a GST-registered supplier.

The proposal to lower the GST rate was discussed in the 32nd meeting of the GST council, held on January 10. As there was no consensus, the matter was referred to a GoFMs.

Three-tier structure

At present, there is a three-tier structure for housing projects — there is no GST on sale of complex/building and ready to move-in flats where sale takes place after issue of completion certificate by the competent authority. GST is applicable on sale of under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale. Card rate for such flats is 18 per cent, but effective rate is 12 per cent after abatement of 33 per cent (cost of land). And, in the affordable housing category the effective rate is 8 per cent. Both these rates are with full input tax credit (ITC).

To boost sentiment

Experts feel that lower duty will boost the sentiment in real estate market. Suresh Nandlal Rohira, Partner at Grant Thornton India LLP, said home buyers will get their due benefits under GST with the decision of GoFMs to recommend lower tax rate. “It is a welcome move as in most cases the buyers always felt that the builders were not passing on the ITC benefits to consumers under 12 per cent levy and the ultimate burden was to be borne by the consumers. This will really change the sentiments and may bring some boost in the real estate sector,” he said.

Another issue likely to be taken up at the meeting is some relief for the exporters. As of now, exporters get refund of basic Customs duty and no compensation for other levies which makes it difficult for them to be competitive. Now an effort is being made to provide duty-drawback kind of scheme where benefits will be provided through e-wallet. Such a mechanism will help exporters deal with the issue of working capital.

Published on February 13, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.