The council will also discuss the issue of state-owned and state-authorised private lottery on the same day
The Goods and Services Tax (GST) Council has deferred a decision on lowering tax on real estate till Sunday as Wednesday's meeting remained inconclusive. The Council has also decided to extend the last date for filing GSTR 3B, the summary sales return form, by two days till February 22. For Jammu and Kashmir, the last date for filing the returns will now be February 28.
The 33rd meeting of the Council, held briefly via video conference yesterday, was later adjourned for Sunday following a demand by some members states to hold a physical meeting rather than through a video conference. The opposition-ruled states such as Kerala, Punjab, Rajasthan, West Bengal, Madhya Pradesh, Karnataka, and Delhi were not in favour of taking a crucial decision on real estate sector in a meeting held through video conference.
"The discussion remained incomplete during video conferencing. Two ministers expressed an opinion…We will try and take a decision on this issue in the meeting on Sunday. The meeting stands adjourned for Sunday after the discussion is halfway through," finance minister Arun Jaitley told reporters after the meeting.
Jaitley also said, "Since some of the members wanted a meeting where the members are physically present and keeping the idea of consensus in mind I adjourned the meeting till Sunday so that a physical meeting can be held and the same issue can be discussed on that day."
The Council, however, did not discuss the issue of 'levying uniform tax' on 'state-owned and state-authorised private' lottery. "The issue of lottery was not discussed. Both the issues will be taken up on Sunday," Jaitley said.
On Sunday, the GST Council will discuss the reports of the GoM on lottery as well as on the real estate sector. The Group of Ministers (GoM), under Gujarat deputy chief minister Nitin Patel, has come up with a report recommending lowering the rates on the under-construction properties to 5% from the current 12%. For affordable under-construction housing segment, it has suggested slashing the GST to 3% from 8% at present. However, in both cases, builders won't be able to claim the benefit of Input Tax Credit (ITC) which is currently available to them, as per the GoM report.
There have been complaints against the builders profiteering by not passing on the benefits of ITC to consumers. The builders should slash the property prices in the range of 4-6% on account of ITC, according to experts.
Currently, premium housing attracts 12% tax while 8% GST is applicable on the affordable housing segment for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale. The GST is, however, not levied on the properties where the completion certificate has been issued to the builder.
According to Prashanth Agarwal, a GST expert and partner at PwC, "Such an announcement of lowering the indirect tax and restricting ITC would have its own set of challenges and could take away the whole advantage of having real estate under GST. These changes go against the very ethos of GST of not promoting tax cascading effect. The Council has to carefully examine its impact on the on-going projects for the real estate developers and consumers.”
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