Prelims Syllabus : Economy- Taxation Mains Syllabus : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
- A panel of State Ministers favored lowering GST on under-construction residential properties to 5%, from the 12% currently.
- The Group of Ministers, (GoM) under Gujarat Deputy Chief Minister, 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% to 3%. The GoM favored lowering GST rates on residential houses to 5 per cent without input tax credit and to 3 per cent for those under affordable housing
- 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%
- 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 roll-out of GST. Because if certificate is issued then they have to pass the ITC benefit
- Some experts say this will lead to reduction of home prices by as much as Rs 3,00,000 for super built-up area of 1,000 sq feet.
- This will boost the demand for the residential houses in the realty sector which will in turn boost the demand for the employment generation in the construction sector.