The Group of Ministers (GoM), under Gujarat deputy chief minister Nitin Patel, was set up last month to analyze tax rates and issues/challenges being faced by the real estate sector under the Goods and Services Tax ( GST ) regime.
The GoM, in its first meeting, decided to recommend a rate reduction on affordable housing from 8 percent to 3 percent.
Reportedly, the report prepared by the GoM would be finalized within a week and would be placed before the GST Council in its next meeting. “The GoM favored lowering GST rates on residential houses to 5 percent without input tax credit and to 3 percent for those under affordable housing,” an official said.
Currently, GST is levied at 12 percent with an 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 percent. 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 the price of the property after the rollout of GST. The GST Council, headed by Union finance minister and comprising his state counterparts, had on January 10 decided to set up a GoM to look into ways to boost the housing sector under GST.
The other ministers in the 7-member GoM are finance ministers of Maharashtra Sudhir Mungantiwar, Karnataka Krishna Byre Gowda, Kerala Thomas Isaac, Punjab Manpreet Singh Badal, Uttar Pradesh Rajesh Agarwal and Goa Panchayat Minister Mauvin Godinho. Apart from Patel and Gondinho, Friday’s GoM meeting was attended by Mungantiwar and Badal through video conferencing. Also other state ministers, who are part of the panel, too would be giving their views in a couple of days.
