GST Council to meet on January 10; to consider 5% GST on under-construction flats

New Delhi: The GSTCouncil is slated to meet on January 10 to discuss lowering GST onunder-construction flats and houses to 5 per cent, as well as hiking exemptionthreshold for small and medium enterprises.

Thecouncil, in its previous meeting on December 22, 2018, had rationalised the 28per cent tax slab and reduced rates on 23 goods and services. “The nextmeeting is scheduled for January 10,” an official told PTI. This would bethe 32nd meeting of the council, which is chaired by Finance Minister ArunJaitley and comprises his state counterparts. Briefing reporters after therecent council meeting, Jaitley had said that the next meeting would considerrationalisation of tax rates on residential properties and raising the thresholdlimit for MSMEs from the current Rs 20 lakh.

Also,the council would consider a composition scheme for small suppliers, apart fromdiscussing levying a calamity cess as well as GST rates on the lottery. The GSTCouncil is likely to consider lowering GST on under-construction flats andhouses to 5 per cent, an official said. Currently, the Goods and Services Tax(GST) is levied at 12 per cent on payments made for under-construction propertyor ready-to-move-in flats where completion certificate has not been issued atthe time of sale. However, GST is not levied on buyers of real estateproperties for which completion certificate has been issued at the time ofsale.

Anofficial said that this 12 per cent GST rate ideally would have been partially offsetby way of taxes paid on inputs by builders and hence the actual incidence ofGST on under-construction home buyers would have been around 5-6 per cent.However, builders are not passing on the input tax credit (ITC) benefit toconsumers. “One of the proposals before the council is to lower the GSTrate to 5 per cent for builders who purchase 80 per cent of inputs fromregistered dealers,” an official said.

Alsothe report of group of ministers looking into the concerns of MSMEs under theGST regime would be taken up for consideration. Currently, businesses with aturnover of up to Rs 20 lakh are exempted from GST. The Council could considerhiking the threshold to Rs 75 lakh for only MSMEs. Besides, the council wouldconsider composition scheme for small suppliers, since it felt that the numberof small service providers getting registered under GST was not on expectedlines.

“Anin-principle unanimous decision was taken that a composition scheme be framedfor small service providers. The threshold and composition charge would bedecided in the next meeting,” Jaitley had said on December 22. With regardto GST on the lottery, currently, state-organised lottery attract 12 per centGST, while state-authorised lottery attracts 28 per cent. A final view would betaken as to whether the status quo should continue on GST on the lottery or ifthere is a scope to tweak it.

Also,a view on levying calamity cess under GST would be discussed by the council. BiharDeputy Chief Minister Sushil Modi led-group of ministers (GoM) had in Octoberhad decided to seek states’ views on whether a state-specific or a nationwide‘disaster tax’ should be levied under the GST. The GST Council, the highestdecision-making body of the new tax regime, had in September decided to set upa seven-member GoM to consider a cess for Kerala flood rehabilitation. “Thenext GST Council meeting within 3 weeks of the last meeting clearly shows theproactive approach of the government towards concerns of the industry and to resolvethem at the earliest,” EY Tax Partner Abhishek Jain said.

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