GoM Favours Cutting GST To 5pc On Residential Properties

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NEW DELHI — A panel of state min­isters Friday favoured lowering GST on under-construction resi­dential properties to 5 per cent, from 12 per cent currently.

The Group of Ministers, un­der Gujarat Deputy Chief Min­ister Nitin Patel, was set up last month to analyse tax rates and issues/challenges being faced by the real estate sector under the Goods and Services Tax (GST) regime. In its first meeting, the GoM also favoured slashing GST on affordable housing from 8 per cent to 3 per cent. Officials said the report of the GoM would be finalised within a week and would be placed before the GST Council in its next meeting.

“The GoM favoured lowering GST rates on residential houses to 5 per cent without input tax credit and to 3 per cent for those under affordable housing,” an of­ficial said. Currently, GST is lev­ied at 12 per cent with Input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

The effective pre-GST tax inci­dence on such housing property was 15-18 per cent. GST, how­ever, is not levied on buyers of real estate properties for which completion certificate has been issued at the time of sale. There have been complaints that build­ers are not passing on the ITC benefit to consumers by way of reduction in price of the prop­erty after the rollout of GST.

The GST Council, headed by Union Finance Minister and com­prising his state counterparts, had on January 10 decided to set up a GoM to look into ways to boost housing sector under GST.

The other ministers in the 7-member GoM are finance ministers of Maharashtra Sudhir Mungantiwar , Karnataka Krish­na Byre Gowda, Kerala Thomas Isaac, Punjab Manpreet Singh Badal, Uttar Pradesh Rajesh Agar­wal and Goa Panchayat Minister Mauvin Godinho. Apart from Pa­tel and Gondinho, Friday’s GoM meeting was attended by Mun­gantiwar and Badal through vid­eo conferencing. Also other state ministers, who are part of the panel, too would be giving their views in a couple of days.

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