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The 33rd GST Council Meeting was held on 24th February 2019 under the Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley in New Delhi. The council meeting concluded with good news for the Real Estate sector of the Indian Economy.
Following are the highlights from the meeting:
- The residential property with 90 sq. meters carpet area in metro cities and 60 sq. meters in non-metro cities priced at Rs. 45 lakh or below considered ‘affordable’ and taxed at 1 percent.
- Under-construction properties priced over Rs. 45 lakh to be taxed at 5 percent.
- Input tax credit not allowed in both the cases.
- The move will come into effect from April 1, 2019.
- Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai MMR region are considered as metro cities.
Shri Arun Jaitley Tweeted, “This will give boost to housing for all & fulfill aspirations of Neo/Middle classes.”
The GST council has decided upon the following recommendations effective 1st April, 2019:
- Definition of affordable housing
A residential house/flat of carpet area of upto 90 sqm in non-metropolitan cities/towns and 60 sqm in metropolitan cities having value upto Rs. 45 lacs (both for metropolitan and non-metropolitan cities).
2. Effective GST rate
- For residential properties outside the affordable segment, GST shall be levied at an effective GST rate of 5% without ITC;
- For affordable housing properties, GST shall be levied at effective GST of 1% without ITC.
3. GST exemption on TDR/ JDA, long term lease (premium), FSI
Intermediate tax on development right, such as TDR, JDA, lease (premium), FSI shall be exempted only for such residential property on which GST is payable.
Advantages of the recommendations made
The following advantages have been taken into consideration by the Council while approving the new tax rate in principle:-
- The buyer of the house gets a fair price and affordable housing gets very attractive with GST @ 1%.
- The interest of the buyer/consumer is protected; ITC benefits not being passed to them shall become a non-issue.
- Cash flow problem for the sector is addressed by the exemption of GST on development rights, long-term lease (premium), FSI etc.
- Unutilized ITC, which used to become cost at the end of the project is removed and should lead to better pricing.
- Tax structure and tax compliance becomes simpler for builders.
Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose. Furthermore, GST Council decided that the issue of the tax rate on lottery needs further discussion in the GoM constituted in this regard.
You may read about 32nd GST Council Meeting.
Earlier the 33rd GST council meeting was scheduled to be held on February 20th, 2019. However, state finance ministers requested a face-to-face discussion on special schemes for Real Estate Industry and issues in taxation system on lotteries. Thus, the union chairperson, Shri Arun Jaitley adjourned the GST council meeting until Sunday, the 24th of February 2019.
The meeting announced a 2 days’ extension to furnish form GSTR 3B for January 2019. The due date to file the form was 20th February 2019, which is now extended to 22nd February 2019.
Union Chairman, Arun Jaitley announced the new date for the GST council meet and adjourned the meet.
The primary agendas to look forward to in the 33rd GST Council Meet
Supply of residential properties under the composition scheme: continuing the discussion from the 32nd GST council, one of the primary agenda of 33rd GST council meet is to decide whether to bring the supply of residential properties in composition scheme or not.
GST Rate slashes on Cement from 28% to 18%: Cement is an essential necessity in modern construction sector and thus the tax levied on the same impacts greatly on the overall costing of the construction. Thus, GST council has to decide the tax applicable on cement.
Duty drawback-like scheme under GST: The exporters in the nation do not receive compensation for taxes paid besides custom duty, which has further affecting their growth capabilities. GST officials confirmed the preparation of a scheme similar to Duty drawback and the same has to be introduced in GST council meet.
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