Council to consider 5% GST on under-construction flats

New Delhi, January 2

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The GST Council is slated to meet on January 10 to discuss lowering GST on under-construction flats and houses to 5 per cent, as well as hiking exemption threshold for small and medium enterprises.

The council, in its previous meeting on December 22, 2018, had rationalised the 28 per cent tax slab and reduced rates on 23 goods and services.

This would be the 32nd meeting of the council, which is chaired by Finance Minister Arun Jaitley and comprises his state counterparts.

Briefing reporters after the recent council meeting, Jaitley had said that the next meeting would consider rationalisation of tax rates on residential properties and raising the threshold limit for MSMEs from Rs 20 lakh.

Also, the council would consider a composition scheme for small suppliers, apart from discussing levying a calamity cess as well as GST rates on the lottery.

Currently, the Goods and Services Tax (GST) is levied at 12 per cent on payments made for under-construction property or ready-to-move-in flats where the completion certificate has not been issued at the time of sale.

However, GST is not levied on buyers of real estate properties for which the completion certificate has been issued at the time of sale.

An official said that this 12 per cent GST rate ideally would have been partially offset by way of taxes paid on inputs by builders and hence the actual incidence of GST on under-construction homebuyers would have been around 5-6 per cent. However, builders are not passing on the input tax credit (ITC) benefit to consumers.

“One of the proposals before the council is to lower the GST rate to 5 per cent for builders who purchase 80 per cent of inputs from registered dealers,” an official said.

Also, the report of the Group of Ministers looking into the concerns of MSMEs under the GST regime would be taken up for consideration.

Currently, businesses with a turnover of up to Rs 20 lakh are exempted from GST. The council could consider hiking the threshold to Rs 75 lakh for only MSMEs.

With regard to GST on lottery, currently state-organised lottery attracts 12 per cent GST, while state-authorised lottery attracts 28 per cent. A final view would be taken as to whether the status quo should continue.

A view on levying calamity cess under GST would also be discussed by the council. Bihar Deputy Chief Minister Sushil Modi led-Group of Ministers (GoM) had in October decided to seek states’ views on whether a state-specific or a nationwide ‘disaster tax’ should be levied under the GST. — PTI