GST Council may bring relief to home buyers! Tax cut likely on residential properties
GST Council Meet: The Group of Ministers (GOM) headed by Gujarat Deputy Chief Minister Nitin Patel endorsed a tax of 3 per cent on the affordable housing category, down from 8 per cent.
A ministerial panel set by Goods and Services Tax (GST) Council scheduled to meet Wednesday is expected to propose taxing under-construction residential properties
at 5 per cent, down from 12 per cent currently.
The Group of Ministers (GOM) headed by Gujarat Deputy Chief Minister Nitin Patel also endorsed a tax of 3 per cent on the affordable housing category, down from 8 per cent. The GOM set up by the GST Council is anticipated to table its report regarding the taxation at the council meeting tomorrow.
The 33rd GST Council Meet will be headed by Finance Minister Arun Jaitley and might be the last one before the code of conduct for general elections kicks in. The proposal to reduce the GST rates were discussed in the 32nd meeting of the GST council held on January 10.
The current rate of GST on premium housing is 12 per cent with input tax credit (ITC) and 8 per cent on affordable housing on under-construction properties. These properties are considered under-construction if the buyer is not issued the completion certificate at the time of sale. However, no GST is levied if a property is bought after the issue of completion certificate.
The effective pre-GST tax incidence on such housing property was 15-18 per cent. The GST Council had set up the ministerial panel amid complaints that builders are not passing on the ITC benefit to property buyers by reducing the property price after the GST rollout.
The seven member GOM was constituted last month to address GST related issues of the real estate sector such as the tax rates on the under-construction residential properties and the tax on lottery tickets. Apart from the Gujarat Deputy Chief Minister, the Other members of the GOM include finance ministers from 5 states and a Panchayat Minister from Goa.
Another 8 member GOM under Maharashtra Finance Minister Sudhir Mungantiwar set up to review tax rate on lottery met on Monday and favoured a uniform GST rate of either 18 per cent or 28 per cent. The current rates tax rate is 12 per cent on state-run lottery and 28 per cent on state-authorised lottery. The final call will be taken at the GST Council meet.
The GOM is also tasked to look whether private persons authorised by the states were misusing the lower rate and filling their pockets at the cost of the state and suggest ways to check this malpractice.