Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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A panel of State Ministers on Friday favoured lowering GST on under-construction residential properties to 5% , from the 12% currently. The Group of Ministers, (GoM) under Gujarat Deputy Chief Minister Nitin Patel, was set up last month to analyse tax rates and issues/challenges being faced by the real estate sector under the Goods and Services Tax (GST) regime.
In its first meeting, the GoM also favoured slashing GST on affordable housing from 8% to 3%.
Officials said the report of the GoM would be finalised within a week and would be placed before the GST Council in its next meeting.
“The GoM favoured lowering GST rates on residential houses to 5% without input tax credit and to 3% for those under affordable housing,” an official said.
Completion certificate
Currently, GST is levied at 12% 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%. 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 roll-out of GST. The GST Council, headed by Union Finance Minister and comprising his State counterparts, had on January 10 decided to set up a Group of Ministers to look into ways to boost housing sector under GST.
