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Last Updated : Feb 19, 2019 02:11 PM IST | Source: Moneycontrol.com

GST Council may lower rates on under-construction properties in February 20 meet

There is also speculation that a rate cut on cement, which currently attracts 28 percent GST, is on the agenda.

The Goods and Services Tax (GST) Council headed by Finance Minister Arun Jaitley will meet on February 20 amid heightened expectations that it will slash tax rates for the real estate sector.

The Council will take up the recommendations of a ministerial panel headed by Gujarat Deputy Chief Minister Nitin Patel, which has finalised a report that is expected to boost the real estate sector.

The meeting is expected to take place via video conference.

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The panel has indicated 5 percent GST on under-construction properties and 3 percent tax in case of affordable housing category. However, in both cases, input tax credit (ITC) cannot be claimed.

There is also speculation that a rate cut on cement, which currently attracts 28 percent GST, is on the agenda.

Currently, GST is levied at an effective rate of 12 percent (standard rate of 18 percent less a deduction of six percent as land value) on premium housing and effective rate of eight percent (concessional rate of 12 percent less a deduction of four percent as land value) on affordable housing 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.

However, homebuyers do not have to pay GST if they purchase a ready-to-move-in property after the issue of completion certificate as it is considered as 'transfer of property' and comes under state's jurisdiction of stamp duty. This generally makes under-construction properties costlier for the buyers.

The ministerial panel or group of Minister's (GoM) was formed to look into the issues faced by the real estate sector.

Terms of reference included possibility of introducing composition scheme for residential construction unit. The panel also had to examine various aspects of GST rate on transfer of development rights (TDR) and development rights in a joint development agreement and suitable model.

Besides, it was expected to look at the legal aspects of inclusion or exclusion of land or any other ingredient, in composition and suggest valuation mechanism.

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First Published on Feb 19, 2019 02:11 pm
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