Currently, GST is levied at 12% with input tax credit 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.
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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 GST regime.
A panel of State Ministers on Friday favoured lowering the GST (Goods and Services Tax) on under construction residential properties to 5%, from 12%currently.
The Group of Ministers (GoM), 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 GST regime.
In its first meeting, the GoM also favoured slashing the GST on affordable housing from 8% to 3%.
Officials said the report of the GoM would be finalised within a week and placed before the GST Council in its next meeting.
“The GoM favoured lowering the GST rates on residential houses to 5% without input tax credit and to 3% for those under affordable housing,” an official said.
Currently, GST is levied at 12% with input tax credit (ITC) 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.
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 rollout of the GST.
The GST Council, headed by the Union Finance Minister and comprising his State counterparts, on January 10 decided to set up the GoM.
The other Ministers in the seven-member GoM are the Finance Ministers of Maharashtra Sudhir Mungantiwar, Karnataka’s Krishna Byre Gowda, Kerala’s Thomas Isaac, Punjab’s Manpreet Singh Badal, Uttar Pradesh’s Rajesh Agarwal and Goa Panchayat Minister Mauvin Godinho.
Apart from Mr. Patel and Mr. Gondinho, Friday’s GoM meeting was attended by Mr. Mungantiwar and Mr. 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.