The government on Tuesday said that a seven-member panel of state finance ministers will consider the proposal of a ‘composition scheme’ for the real estate sector under the goods and services tax (GST) and recommend a mechanism for the same to the GST Council.
The panel will be headed by Gujarat deputy chief minister Nitin Patel and will also have the finance ministers of Maharashtra, Karnataka, Kerala, Punjab, Uttar Pradesh and Goa as members. The group of ministers (GoM) is tasked with the analysis of GST rate on the sector, including issues in view of the proposal for shoring up the real estate sector.
The panel would also examine the legality of inclusion/exclusion of land or any other ingredient, in composition and suggest valuation mechanism. It would also examine various aspects of GST on Transfer of Development Rights (TDR) and Development Rights in a joint agreement and suitable model, the statement added.
The GST Council in its recent meeting on January 10 had decided to set up a GoM after it failed to reach a consensus on a proposal to cut GST rate on real estate to 5% from existing 12% while blocking input tax credit for building. The slowdown in the GST sector was referred to as one of the reasons for subdued GST collections by finance minister Arun Jaitley.
Currently, GST is levied at 12% 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.
Source :- Financialexpress.com