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Homebuyers, MSMEs likely to get GST relief today

The Council, headed by finance minister Arun Jaitley, is also likely to increase the threshold for GST registration to an annual turnover of up to Rs 50-75 lakh

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The GST Council will today decide on reducing the Goods and Services Tax (GST) on under-construction flats and houses from 12% to 5%, bringing relief to the homebuyers. The Council is also likely to provide relief to small and medium businesses by easing tax compliance limit and extending the composition scheme to the service sector.

“The construction industry will, however, not get the benefit of Input Tax Credit (ITC). There were several complaints coming to the office of National Anti-Profiteering Authority (NAA) about the builders not passing on the benefit of the ITC to homebuyers,” a government official said. The demand for reduction in the GST on cement from 28% to 18% is also being considered.

The Council, headed by finance minister Arun Jaitley, is also likely to increase the threshold for GST registration to an annual turnover of up to Rs 50-75 lakh. At present, businesses with an annual turnover of up to Rs 20 lakh don't pay the indirect tax.

The hike in threshold exemption will be applicable to business-to-consumer (B2C) firms and not for business-to-business (B2B) firms, the official said.

The Council is also likely to decide on allowing the Kerala government to levy 1% calamity cess for a period of two years over to help it carry out reconstruction post-floods. Group of Ministers (GoM) headed by deputy chief minister of Bihar Sushil Modi will present its report on the 'natural calamities and disasters' recommending 1% cess for Kerela to the Council.

A decision on the proposal to bring small service suppliers under the composition scheme is also likely to be taken today. The panel led by minster of state for finance Shiv Pratap Shukla will suggest extending the composition scheme to service providers with an annual turnover of up to Rs 50 lakh. The composition scheme dealers need to file returns annually.

The composition scheme, currently applicable on only goods traders, allows small businesses to pay tax at a lower rate as compared to the others. “The threshold for availing of the scheme may be fixed at the annual turnover of up to Rs 50 lakh for the suppliers of services. They will need to pay 5% GST under it,” the official said. Currently, the suppliers of services can't avail the composition scheme.

“There is an expectation that the GST Council could recommend composition scheme for real estate sector. Such an announcement would have its own set of challenges and could take away the whole advantage of having real estate under GST,” said Prashanth Agarwal, GST expert at PwC. “These changes of bringing specific sectors under composition go against the very ethos of GST of not promoting tax cascading effect. Council has to carefully examine its impact on the ongoing projects for the real estate developers and consumers. They may even evaluate to give composition as an option to real estate developers with clear guidelines on how it would be implemented,” he added.

COUNCIL TO MEET TODAY

  • Rs 20 lakh – Annual turnover is threshold for GST registration
     
  • Rs 50-70 lakh – The same may go up to
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